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Judgment
Chitra Venkataraman, J.—The Tax Case (Appeals) arise out of the common order of the Income Tax Appellate Tribunal relating to the assessment years 2000-01 to 2005-06. The assessee raised the following substantial question of law seeking admission of the above Tax Case (Appeals):-
Whether on the facts and in the circumstances, the Income Tax Appellate Tribunal is right in law in confirming the estimated addition of income from business and jewellery business, in assessments concluded u/s. 143(1) read with Section 153C of the Act?
The assessee herein is engaged in the business of jewellery and money lending. A search was conducted in the business premises on 03.08.2005. It is stated that the assessee in his capacity as an individual returned income from jewellery business. The search revealed that the assessee had not disclosed income earned from money lending business in any of the returns and the assessee admitted additional amount from jewellery business as well as from finance business. It is stated that a sum of Rs. 95,48,810/- was admitted by the assessee in the return filed for the assessment year 2006-07 and a sum of Rs. 17,24,705/-, Rs. 5,00,000/- and Rs. 3,00,000/- were also admitted by the assessee in the return for assessment year 2006-07. Apart from that, the assessee admitted a sum of Rs. 2,74,000/- from the finance business and Rs. 76,42,159/- against "Rokas". In respect of the return for the assessment year 2000-01, the aggregate of the admitted amount came to Rs. 74,45,523/-.
In the course of search, books of accounts covering the period 09.11.1999 to 27.10.2000, 28.10.2000 to 27.11.2001, it was noted that the assessee was having two types of money lending business, one was called Sahukhari Byaj Investment which were loans given on security of promissory notes or Rokas and the other was loans given on the security of gold jewellery, which was called Girivi Byaj business. After netting the debtors and creditors, the Assessing Officer determined the unexplained investment in the Sahukhari Byaj business at Rs. 74,45,523/- for the assessment year 2000-01. Though the assessee filed fund flow statement and argued that the debtors and creditors were netted over a period of time and the actual investment of Rs. 76,42,159/- stood admitted over various years in the returns filed after the search, the Assessing Officer viewed that such unexplained investment ought to have been disclosed in the return for assessment year 2000-01 itself. Thus, according to the Assessing Officer, onus was on the assessee to prove that the opening balance pertained to earlier years and not to the assessment year 2000-01. It is stated that the assessment in respect of all other assessment years were on the same pattern as mentioned in the assessment year 2000-01 except for an addition of Rs. 95,48,810/- made in assessment year 2005-06 for unexplained stock in jewellery business. Though assessee had shown in his return of income for assessment year 2006-07 the value of unexplained surplus stock found on the date of search viz., Rs. 95,48,810/-, the Assessing Officer was of the opinion that surplus stock had to be shown in assessment year 2005-06 itself; thus, additions were made under various heads in the assessments completed u/s 153C read with Section 143(3) of the Income Tax Act, 1961 based on materials.
The assessee filed appeal before the Commissioner of Income Tax (Appeals), who, viewed that as far as Rs. 74,45,523/- made as addition for investment in Sahukhari Byaj business was concerned, it represented only opening balance; there was nothing to show that it represented investment of the assessee during the relevant previous year; that the statement recorded on 29.09.2005 were relied on for the purpose of making additions; as regards the undisclosed income from jewellery business, the same was based on the statement recorded from the assessee and not based on any search materials; consequently, it was also cancelled by the Commissioner of Income Tax (Appeals). As far as addition for interest on Sahukhari Byaj business was concerned, the Commissioner of Income Tax (Appeals) gave the same reasoning. On the unexplained investment on gold jewellery business, the assessee admitted the excess stock in gold and silver in his return for assessment year 2006-07, thus, according to the Commissioner of Income Tax (Appeals), there was nothing to show that the excess stock-in-trade of gold and silver arose out of transaction relevant to assessment year 2005-06 or any earlier years. In that view of the matter, Commissioner of Income Tax (Appeals) deleted the addition.
Aggrieved by the same, the Revenue went on appeal before the Income Tax Appellate Tribunal contending that the assessee did not disclose any income from finance business/Sahukhari Byaj business in the returns filed prior to the date of search. Revenue further contended that the assessee was earning substantial interest income which were revealed from the records seized at the time of search, which included books of accounts of Sahukhari Byaj business. The Revenue contended that the assessee could not discharge his onus with regard to the opening balance as on 08.11.1999; thus, the deletion of addition by Commissioner of Income Tax (Appeals) was without any basis.
The Income Tax Appellate Tribunal pointed out that admittedly, the assessee had shown income only from jewellery business in the returns filed prior to the search; it was admitted that the assessee had shown the surplus stock found at the time of search on 03.08.2005 exceeding Rs. 95,00,000/-; thus, the admitted position was that income from his money lending business, was ever disclosed by the assessee. The Income Tax Appellate Tribunal pointed out that the assessee admitted that he was running a finance business for three decades and the same were not disclosed in the regular returns filed; in the circumstances, the admission of an amount of Rs. 2,03,15,674/- made by the assessee in various returns filed by him after the search including the return for assessment year 2006-07, which year was not in appeal before the Income Tax Appellate Tribunal, particularly, with reference to the interest income from the finance business was liable to be assessed at the hands of the assessee. The Income Tax Appellate Tribunal further pointed out that at the time of search, two books of accounts were found with respect to his finance business, one for Diwali year 9.11.1999 to 27.10.2000 and other for 28.10.2000 to 27.11.2001 which showed the investment of Rs. 1,21,33,793/- in such business as on 8.11.1999. Referring to statement recorded from the assessee on 29.09.2005, the Income Tax Appellate Tribunal came to the factual finding that the assessee was having Sahukhari Byaj business and was also earning substantial interest thereon. The Income Tax Appellate Tribunal further pointed out that although the assessee did not produce any material to show that opening balance as on 8.11.1999 as relatable to any earlier years, yet there was nothing to show that the opening balance as on 08.11.1999 was the income of the assessee for the assessment year 2000-01. The Income Tax Appellate Tribunal pointed out that apart from the addition made by the Assessing Officer for the assessment year 2000-01, for assessment years 2001-02, 2002-03 and 2005-06, the assessee had disclosed a sum of Rs. 76,42,159/-. Considering these aspects, the Income Tax Appellate Tribunal agreed with Commissioner of Income Tax (Appeals) that there could be no addition for 2000-01, however, the Tribunal viewed that additions made by the Assessing Officer for interest earned by the assessee in such business for various years merited assessment. To that extent, the order of the Commissioner of Income Tax (Appeals) was set aside.
As regards the jewellery business, admittedly, a cash book was found at the time of search and seized. The Income Tax Appellate Tribunal referred to the statement recorded from the assessee and held that there was sufficient evidence found at the time of search to show that assessee was having substantial gold and silver jewellery business apart from what was returned by the assessee in books of accounts and there was surplus stock of more than Rs. 95 lakhs and odd and the assessee was unable to establish that admission made by him at the time of search was not correct, thus, the Assessing Officer was justified in estimating the income of the assessee from jewellery business for various years. The Income Tax Appellate Tribunal pointed out that for assessment years 2000-01 and 2001-02, the Assessing Officer did not give any reduction for the income returned in the regular returns. The Income Tax Appellate Tribunal held that the additions made however took note of the materials gathered and hence were to be sustained. Thus, the Tribunal reversed the order of the Commissioner of Income Tax (Appeals). However, the Assessing Officer was directed to exclude the income of Rs. 1,05,528/- and Rs. 89,702/- returned by the assessee in the returns filed for 2000-01 and 2001-02 while confirming the addition.
As regards the excess stock of gold and silver jewellery for assessment year 2005-06, the Income Tax Appellate Tribunal pointed out that the search was conducted in previous year 2005-06 relevant to assessment year 2006-07. The Income Tax Appellate Tribunal held that Commissioner of Income Tax (Appeals) was justified in taking the view that the excess stock found at the time of search could be considered for assessment only in the assessment years relevant to the previous year in which the search was conducted, hence, assessable only for assessment year 2006-07. As the assessee had returned the income in the said assessment year, the Income Tax Appellate Tribunal confirmed the order of the Commissioner of Income Tax (Appeals) deleting the additions. The Income Tax Appellate Tribunal directed the Assessing Officer to ensure that the amount was included in the income of the assessee in the assessment for the assessment year 2006-07. Aggrieved by this, the assessee has preferred these appeals.
The narration of facts in the preceding paragraphs would clearly point out that the issue raised in the Tax Case (Appeal) seeking admission is purely question of fact. The substantial question of law raised before this Court seeking admission makes no secret about that too. Thus, having gone through the order of the Assessing Officer, Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal, we are convinced that there being no factual error in the order passed or no perversity shown in the finding of the Income Tax Appellate Tribunal, no substantial question of law arises to admit the Tax Case (Appeals) filed by the assessee. Accordingly, the Tax Case (Appeals) are dismissed. No costs. Consequently, connected MP is closed.