The Commissioner Of Income Tax, Kota v. M/S Jai Bharat Fruit Co., New Subjimandi, Kota

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 724 / 2008 The Commissioner of Income Tax, Kota. ----Appellant Versus M/s Jai Bharat Fruit Co., New Subjimandi, Kota. ----Respondent Connected With D.B. Income Tax Appeal No. 653 / 2008 The Commissioner of Income Tax, Kota. ----Appellant Versus Sh. Prakash Kumar Batwani, P/o M/s. Jai Bharat Fruit Co., New Subjimandi, Kota. ----Respondent D.B. Income Tax Appeal No. 818 / 2008 The Commissioner of Income Tax, Kota ----Appellant Versus Sh. Prakash Kumar Batwani, P/o M/s. Jai Bharat Fruit Co., New Subjimandi, Kota. ----Respondent D.B. Income Tax Appeal No. 821 / 2008 The Commissioner of Income Tax Kota. ----Appellant Versus Sh. Prakash Kumar Batwani, P/o M/s. Jai Bharat Fruit Co., New Subjimandi, Kota. ----Respondent D.B. Income Tax Appeal No. 822 / 2008 The Commissioner of Income Tax Kota. ----Appellant Versus Sh. Prakash Kumar Batwani, P/o M/s. Jai Bharat Fruit Co., New Subjimandi, Kota. ----Respondent _____________________________________________________ For Appellant(s) : Ms. Parinitoo Jain. For Respondent(s) : Mr. Gunjan Pathak with Ms. Ishita Rawat. _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE INDERJEET SINGHOrder 05/07/2017 1.In all these appeals common question of law and fact areinvolved, they are decided by the common judgment. 2.By way of these appeals, the appellant has challenged thejudgment and order of the Tribunal whereby the tribunal haspartly allowed the appeals preferred by the assessee. 3.While admitting the appeals, this court framed the followingsubstantial question of law:- “(1) ITA NO. 724/2008 (1) Whether under the facts and circumstances ofthe case and in law, the Tribunal was justified inallowing relief in respect of additions which werebased on incriminating evidences seized and notrecorded in the regular books of accounts? (2) Whether under the facts and circumstances ofthe case and in law, the Tribunal was justified inadmitting retraction of the assessee from theconfessional statement given u/s. 132(4) withoutany cogent evidence and in disregard to thedictum of Hon'ble Apex Court in the case ofSurjeet Singh Chhabra reported in AIR 1997 SC2560? (3) Whether under the facts and circumstances ofthe case and in law, the Assessing officer wasjustified in making additions on the basis of reportof special auditor obtained u/s. 142(2A) of theIncome Tax Act which were deleted by the Tribunalon the basis of the recasted books of acounts ofthe assessee submitted after the date of search? (4) Whether under the facts and circumstances ofthe case and in law, the order of Tribunal isperverse in deleting the addition of Rs.21,41,843/- made by the Assessing Officer inrespect of undisclosed interest income earned onlottery scheme? (5) Whether under the facts and circumstances ofthe case and in law the order of the Tribunal isperverse in deleting the addition of Rs.44,09,005/-made by the Assessing Officer on the report ofSpecial Auditor appointed u/s. 142(2A) of theIncome Tax Act? (6) Whether under the facts and circumstances ofthe case and in law, the order of Tribunal isperverse in deleting the additions ofRs.2,07,04,897/- made on account of suppressedcommission and mandi tax by the AssessingOfficer? (2) ITA NO. 653/2008 (1) Whether under the facts and circumstances ofthe case and in law, the Tribunal was justified inallowing relief in respect of additions which werebased on incriminating evidences seized and notrecorded in the regular books of accounts? (5) Whether under the facts and circumstances ofthe case and in law the order of the Tribunal isperverse in deleting the addition of Rs.44,09,005/-made by the Assessing Officer on the report ofSpecial Auditor appointed u/s. 142(2A) of theIncome Tax Act? (6) Whether under the facts and circumstances ofthe case and in law, the order of Tribunal isperverse in deleting the additions ofRs.2,07,04,897/- made on account of suppressedcommission and mandi tax by the AssessingOfficer? (2) ITA NO. 653/2008 (1) Whether under the facts and circumstances ofthe case and in law, the Tribunal was justified inallowing relief in respect of additions which werebased on incriminating evidences seized and notrecorded in the regular books of accounts? (2) Whether under the facts and circumstances ofthe case and in law, the Tribunal was justified inadmitting retraction of the assessee from theconfessional statement given u/s. 132(4) withoutany cogent evidence and in disregard to thedictum of Hon'ble Apex Court in the case ofSurjeet Singh Chhabra reported in AIR 1997 SC2560? (3) Whether under the facts and circumstances ofthe case and in law, the Assessing officer wasjustified in making additions on the basis of reportof special auditor obtained u/s. 142(2A) of theIncome Tax Act which were deleted by the Tribunalon the basis of the recasted books of acounts ofthe assessee submitted after the date of search? (4) Whether under the facts and circumstances ofthe case and in law, the order of Tribunal isperverse in deleting the mandatory interest which is required to be charged u/s. 158BFA(1) for latefiling of the returns? (3) ITA No. 818/2008 (1) Whether under the facts and circumstances ofthe case and in law, the Tribunal was justified inallowing relief in respect of additions which werebased on incriminating evidences seized and notrecorded in the regular books of accounts? (2) Whether under the facts and circumstances ofthe case and in law, the Tribunal was justified inadmitting retraction of the assessee from theconfessional statement given u/s. 132(4) withoutany cogent evidence and in disregard to thedictum of Hon'ble Apex Court in the case ofSurjeet Singh Chhabra reported in AIR 1997 SC2560? (3) Whether under the facts and circumstances ofthe case and in law, the Assessing officer wasjustified in making additions on the basis of reportof special auditor obtained u/s. 142(2A) of theIncome Tax Act which were deleted by the Tribunalon the basis of the recasted books of acounts ofthe assessee submitted after the date of search? (4) Whether under the facts and circumstances ofthe case and in law, the order of the Tribunal isperverse in deleting the addition of Rs.2,94,151/-made on account of the undisclosed cash found atthe business premises and the same wssurrendered for taxation u/s.132(4) of the IncomeTax Act? (5) Whether under the facts and circumstances ofthe case and in law, the order of the Tribunal isperverse in deleting the additions of Rs.74,274/-made on account of unexplained cash paymentswhich were not found in the regular books ofaccounts? (6) Whether under the facts and circumstances ofthe case and in law, the order of the Tribunal isperverse whereby the interest chargedu/s.158BFA(1) was deleted on surmises andconjectures and also not deciding independentlyon merits? (4) ITA NO. 821/2008 (1) Whether under the facts and circumstances ofthe case and in law, the Tribunal was justified inallowing relief in respect of additions which werebased on incriminating evidences seized and notrecorded in the regular books of accounts? (5) Whether under the facts and circumstances ofthe case and in law, the order of the Tribunal isperverse in deleting the additions of Rs.74,274/-made on account of unexplained cash paymentswhich were not found in the regular books ofaccounts? (6) Whether under the facts and circumstances ofthe case and in law, the order of the Tribunal isperverse whereby the interest chargedu/s.158BFA(1) was deleted on surmises andconjectures and also not deciding independentlyon merits? (4) ITA NO. 821/2008 (1) Whether under the facts and circumstances ofthe case and in law, the Tribunal was justified inallowing relief in respect of additions which werebased on incriminating evidences seized and notrecorded in the regular books of accounts? (2) Whether under the facts and circumstances ofthe case and in law, the Tribunal was justified inadmitting retraction of the assessee from theconfessional statement given u/s. 132(4) withoutany cogent evidence and in disregard to thedictum of Hon'ble Apex Court in the case ofSurjeet Singh Chhabra reported in AIR 1997 SC2560? (3) Whether under the facts and circumstances ofthe case and in law, the Assessing officer wasjustified in making additions on the basis of reportof special auditor obtained u/s. 142(2A) of theIncome Tax Act which were deleted by the Tribunalon the basis of the recasted books of acounts ofthe assessee submitted after the date of search? (4) Whether under the facts and circumstances ofthe case and in law, the order of Tribunal isperverse in deleting the mandatory interest whichis required to be charged u/s. 158BFA(1) for latefiling of the returns? (5) ITA NO.822/2008 (1) Whether under the facts and circumstances ofthe case and in law, the Tribunal was justified inallowing relief in respect of additions which werebased on incriminating evidences seized and notrecorded in the regular books of accounts? (2) Whether under the facts and circumstances ofthe case and in law, the Tribunal was justified inadmitting retraction of the assessee from theconfessional statement given u/s. 132(4) withoutany cogent evidence and in disregard to thedictum of Hon'ble Apex Court in the case ofSurjeet Singh Chhabra reported in AIR 1997 SC2560? (3) Whether under the facts and circumstances ofthe case and in law, the Assessing officer wasjustified in making additions on the basis of reportof special auditor obtained u/s. 142(2A) of theIncome Tax Act which were deleted by the Tribunalon the basis of the recasted books of acounts ofthe assessee submitted after the date of search? (4) Whether under the facts and circumstances ofthe case and in law, the order of Tribunal isperverse in deleting the mandatory interest whichis required to be charged u/s. 158BFA(1) for latefiling of the returns? 5.Counsel for the appellants has taken us to the order of A.O.in appeal no.724/2008 and contended that the A.O. whileconsidering the matter has discussed the evidence which wasseized during the search on 24.02.1999 and 07.04.1999 and aftertaking into consideration he has clarified headwise as under:- “A. Interest Income earned on funds received by theassessee as a result of organizing lottery scheme.assessee as a result of organizing lottery scheme. B.Interest Income on loans other than lottery loansas were doubt by the nominated auditor and formingpart of the audit report under section 142(2A).as were doubt by the nominated auditor and formingpart of the audit report under section 142(2A). C. Income form Beecee. D. Cash deficit occurred out of cash flow statementforming part of audit report u/s 142(2A).forming part of audit report u/s 142(2A). E.Suppressed Commission and Mandi tax. F. Concealed commission and Mandi tax in additionto the undisclosed commission/Mandi tax referred toin para E above.to the undisclosed commission/Mandi tax referred toin para E above. “A. Interest Income earned on funds received by theassessee as a result of organizing lottery scheme.assessee as a result of organizing lottery scheme. B.Interest Income on loans other than lottery loansas were doubt by the nominated auditor and formingpart of the audit report under section 142(2A).as were doubt by the nominated auditor and formingpart of the audit report under section 142(2A). C. Income form Beecee. D. Cash deficit occurred out of cash flow statementforming part of audit report u/s 142(2A).forming part of audit report u/s 142(2A). E.Suppressed Commission and Mandi tax. F. Concealed commission and Mandi tax in additionto the undisclosed commission/Mandi tax referred toin para E above.to the undisclosed commission/Mandi tax referred toin para E above. G. Deposits/Loans in cash in contravention of section269SS and 269T of the I.T. Act. “269SS and 269T of the I.T. Act. “ 6.Taking into consideration the above, counsel for theappellant contended that though the authorities CIT(A) andtribunal while taking into consideration recast the books ofaccount and has reversed the finding of A.O. on the basis of seizedmaterial. 7.Counsel for the respondent contended that the books ofaccount were never rejected and the seized material which hasbeen sought to be relied on either it was relied on or explained inthe books of account. The CIT(A) while considering the case hasdiscussed in detail each of the grounds which has been discussedby the tribunal and the tribunal has held in favour of the assessee. He contended that this will amount to appreciation of fact and nosubstantial question arises in these appeals. 7.We have heard counsel for the parties. 8.On the first issue whether the tribunal was justified inallowing relief in respect of additions which was based onincriminating evidence seized and not recorded in the regularbooks of account in view of the fact that books of account whichwas accepted and not rejected by the A.O. it will not be reliedupon. In that view of the matter, on first issue, in our consideredopinion, the tribunal has not committed any error in relying uponthe books of account unless the same is rejected by the A.O. Inour considered opinion it will not be appropriate for the tribunal tobase its decision on seized material other than the books ofaccount maintained by the assessee. 9.On the issue no.2, the tribunal has relied on the judgment ofthe Supreme Court which will not apply in the present case. 10.Taking into consideration, the second issue is required to bedecided in favour of the assessee and against the department. 11.On the issue of 142(2A), issue no.3 & 5 are taken togetherand taking into consideration the provisions of Section 142(2A),we are of the considered opinion that the tribunal has notcommitted any error in relying upon the books of accounts whichwere never rejected by the AO. 12.On issue no.4 regarding lottery income, the lottery wasshown on the books of accounts and the amount which has been shown by way of interest income earned on lottery was rightly notheld to be not received by the assessee. 12.1 Taking into consideration the interest amount taken from thepersons to whom loan was given, the same was explained by thetribunal in detail. In that view of the matter, issue no.4 is required to beanswered in favour of the assessee and on last issue the tribunalwas not perverse in deleting the additions on Mandi tax as thebooks of accounts were never rejected by the assessing officer. In that view of the matter, this issue is also decided in favour of the assessee. The appeals stand dismissed. A copy of this judgment be placed in each file. (INDERJEET SINGH),J. (K.S. JHAVERI),J. Bm gandhi/80-84.