ANAND KUMAR AGRAWAL,RAM MANDIR COLONY V. ACIT CENRAL CIRCLE, MAQBOOL ALAM ROAD

ITA 152/VNS/2024

AI Insights

The case revolves around the classification of income declared by Anand Kumar Agrawal for the Assessment Year 2014-15, following a search operation under section 132 of the Income Tax Act, 1961. The primary contention was whether the income from sales of grit materials and a brokerage income (Dalali income) should be assessed under the head 'Income from Business'. The AO initially assessed the entire deposit as income under section 68, which was contested. The CIT(A) accepted the business income from sales but confirmed the addition of Rs.16,00,000 as income under section 68 due to lack of supporting material for the brokerage income claim. The Tribunal, however, directed the AO to reassess the brokerage income as business income, citing insufficient contrary material to disprove the assessee's claims and the lack of thorough investigation by the tax authorities.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 471097 (ITAT-VARANASI)
• Duration Of Justice: 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-09-2024
• Assessment Year: 2014-2015
• Appeal Filed On: 23-08-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMALENDU NATH MISHRA
• Assessee Lawyers: SHISHIR BAJPAI
• Keywords: Set aside; Business income

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL VARANASI BENCH “DB”, VARANASI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA No. 152/VNS/2024 Assessment Year 2014-15 Anand Kumar Agrawal, 14/364, Ram Mandir Colony, Obra PAN : AHUPA8215A vs. Asst. Commissioner of Income Tax, Central Circle, Aayakar Bhavan, Maqbool Alam Road, Varanasi (Appellant) (Respondent) For Assessee : Shri Shishir Bajpai, CA., For Revenue : Shri Amalendu Nath Mishra, CIT-DR Date of Hearing : 10-09-2024 Date of Pronouncement : 15-10-2024 O R D E R PER B.R. BASKARAN, A.M : The assessee has filed this appeal challenging the order dated 27- 06-2024 passed by Ld.CIT(A), Lucknow-3 and it relates to the Assessment Year (AY.) 2014-15. The only issue urged in this relates to the issue of determination of correct head of income under which the income declared by the assessee is to be assessed. 2. The facts relating to the case are discussed in brief. A search u/s. 132 of the Income Tax Act, 1961 („the Act‟) was conducted at the residential premises of the assessee and consequently, the present assessment is completed u/s.153A of the Act. The issue under consideration is related to the deposits to the tune of Rs.23,23,111/- 2 ITA No. 152/VNS/2024 found in the bank account of the assessee. Before the AO, the assessee explained that he had traded in grit materials during the year under consideration. The aggregate amount of sales was Rs.7,23,111/- and the proceeds were credited to his bank account. The assessee had offered a sum of Rs.57,850/- as his income on the above sales u/s.44AD of the Act in his return of income. With regard to the remaining amount of Rs.16,00,000/-, the assessee submitted that the same represents brokerage income (Dalali income) in sale of grit materials. The assessee, however, did not offer this income in his return of income. The assessee also furnished details of persons from whom Dalali income was received. Accordingly, he agreed to offer the same as his income before the AO. 3. The AO did not accept the explanations of the assessee. Accordingly, he assessed the entire deposits of Rs.23,23,111/- as income of the assessee u/s.68 of the Act. 4. The Ld.CIT(A) accepted the contentions of the assessee with regard to the deposits of Rs.7,23,111/- and accordingly directed the AO to assess the profit of Rs.57,850/- only. With regard to the claim of Dalali income of Rs.16.00 lakhs, the Ld.CIT(A) took the view that the assessee has failed to furnish any material to support his claim of receipt of Dalali income from certain persons. Accordingly, he confirmed the addition of Rs.16.00 lakhs. 5. We heard rival contentions and perused the record. With regard to the income of Rs.57,850/- determined u/s.44AD of the Act, the Ld.AR submitted that the Ld.CIT(A) has not specifically stated that the same is assessable as income under the head Income from Business. Since the income has been determined u/s.44AD of the Act and since the said section falls under the head „Income from Business‟, there should not be any doubt that the same is assessable as business income only. We direct the AO accordingly. 3 ITA No. 152/VNS/2024 6. With regard to the claim of Dalali income of Rs.16.00 lakhs, we notice that the Ld.CIT(A) has rejected the said claim, only for the reason that the assessee has not furnished any material to support the claim that the same was received in connection with liaison work from the persons mentioned in the list. In our view, the tax authorities are not right in rejecting the submission of the assessee in this regard without bringing any other contrary material to disprove the claim of the assessee. Thus, in our view, the Ld.CIT(A) has rendered his decision on surmises and conjectures, which cannot be sustained. The surmises and suspicion cannot undo the statement given by the assessee unless it is contradicted by any other strong material. If the tax authorities are having doubt over the claim, they could have conducted necessary enquiries with the persons from whom the assessee has claimed to have received the brokerage income. The same has not been done by the tax authorities. Accordingly, we are of the view that there is no reason to reject the claim of receipt of Rs.16.00 lakhs by way of brokerage income. The said income, obviously, is assessable as income from business only. Accordingly, we set aside the order passed by Ld.CIT(A) on this issue and direct the AO to assess the above said dalali income of Rs.16.00 lakhs as income under the head Income from business. 7. In the result, the appeal filed by the assessee is allowed. Order pronounced on 15-10-2024 by way of proper mentioning in the Notice Board. Sd/- Sd/- [AMIT SHUKLA] [B.R. BASKARAN] JUDICIAL MEMBER ACCOUNTANT MEMBER Varanasi, Dated: 15-10-2024 TNMM 4 ITA No. 152/VNS/2024 Copy to : 1. The Appellant 2. The Respondent 3. The Pr. CIT, concerned 4. D.R. ITAT, Varanasi 5. Guard File. //By Order// //True Copy // Dy./Asst. Registrar, ITAT, Varanasi "