Shri Arpit Dubey, Indore V. The Income Tax Officer 5(1), Indore

CO 103/IND/2012

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8541 (ITAT-INDORE)
• Duration Of Justice: 5 month(s) 7 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 07-05-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 30-11-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R R MEENA
• Assessee Lawyers: G B AGRAWAL
• Keywords: Gift

Judgement Text

1 INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO. 549/IND/2012 A.Y. 2008-09 ITO-5(1), INDORE :: APPELLANT VS ARPIT DUBEY, INDORE PAN ALCPD 4422 G :: RESPONDENT AND, CROSS-OBJECTION NO.103/IND/2012 (ARISING OUT OF ITA NO. 549/IND/2012) A.Y. 2008-09 ARPIT DUBEY, INDORE PAN ALCPD 4422 G :: OBJECTOR VS ITO-5(1), INDORE :: RESPONDENT REVENUE BY SHRI R.R. MEENA ASSESSEE BY SHRI G.B. AGRAWAL 2 DATE OF HEARING 7.5.2013 DATE OF PRONOUNCEMENT 7.5.2013 O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 11 TH JULY, 2012, PASSED BY THE LD. FIRST APPELLATE AUTHORIT Y, INDORE WHEREAS THE ASSESSEE IS IN CROSS-OBJECTION. NO W, WE SHALL TAKE UP THE APPEAL OF THE REVENUE WHEREIN FIRST GROUND RAISED IS OF GENERAL NATURE, WHICH WAS NOT PRESS ED, THEREFORE, THIS GROUND IS DISMISSED AS NOT PRESSED. 2. THE NEXT GROUND PERTAINS TO DELETION OF ADDITION O F RS.3,85,475/- MADE ON ACCOUNT OF UNEXPLAINED OPENING CAPITAL. THE CRUX OF ARGUMENTS ON BEHALF OF THE REVENUE IS THAT THE ADDITION WAS DELETED WITHOUT APPRECIATING THE F ACT IGNORING THAT THE ASSESSEE FAILED TO FURNISH EVEN BASIC DETAILS OF SOURCE OF OPENING CAPITAL. THE ADDITION WAS 3 SUPPORTED. ON THE OTHER HAND, THE LEARNED COUNSEL FO R THE ASSESSEE CONTENDED THAT THE ADDITION WAS RIGHTLY DELETE D. 2.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIAL AVAILABLE ON RECORD. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL, DERIVES INCOME FROM MANAGING EVENTS AND ENTERTAINMENT SERVICES. IT IS THE F IRST YEAR OF THE BUSINESS. THE ASSESSEE CLAIMED TO HAVE INTRODUCED INITIAL CAPITAL OF RS.3,17,707/- WHICH WAS DEPOSITED IN THE BANK. THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF THIS INITIAL CAPITAL. THE ASSESSEE, VIDE HIS LETTER, EXPLAINED AS UNDER: THE OPENING CAPITAL OF THE ASSESSEE AS PER BOOKS OF ACCOUNTS PRODUCED BEFORE YOUR HONOR IS RS.3,85,475.00, THE ASSESSEE IS 27 YEAR OLD AND BEFORE DOING THE BUSINESS, THE ASSESSEE IS IN JOB WITH SOME PRIVATE CONCERNS WHERE HE HAD SALARY WHICH ALTHOUGH LESS THAN THE MINIMUM TAXABLE LIMIT. FURTHERMORE, THE OPENING CAPITAL OF ASSESSEE CONSIST OF A SHOP VALUE RS.2,15,300.00 (INCLUDING A REVALUATION RESERVE OF RS.1,29,000) WHICH WAS GIFTED BY HIS FATHER DURING THE YEAR 2003-04. COPY OF THE SAME IS ENCLOSED HEREWITH AS PAGE NO.72 TO 80, 4 HENCEFORTH THE NET OPENING CAPITAL OF THE ASSESSEE IS RS.1,70,175.00. ONLY AND LOOKING TOWARDS THE AGE AND THE PAST WORKING OF THE ASSESSEE THE OPENING CAPITAL AS PRODUCED BY THE ASSESSEE IN HIS BOOKS OF ACCOUNTS AND HIS AUDITED REPORT IS JUSTIFIABLE. BEFORE THE LD. CIT(A), THE PLEA WAS RAISED BY THE ASSES SEE THAT A TURNOVER OF RS.90 LACS WAS ACHIEVED AND THE NET PROFIT WAS SHOWN AT RS.5.75 LACS AND AFTER CLAIMING THE DEDUCTION THE NET RETURNED INCOME WAS DISCLOSED AT RS.4,75,650/-. TOTALITY OF FACTS INDICATES THAT WITHOUT THE INITIAL CAPITAL, SUCH A TURNOVER WAS NOT POSSIBLE. WE FI ND THAT THE ASSESSING OFFICER HAS ADOPTED A VERY RIGID APPROACH AND THUS, THE OPENING CAPITAL OF RS.3.85 LACS WAS NOT SUCH A HUGE AMOUNT WHICH COULD NOT BE BELIEVED. E VEN THE BREAKUP OF OPENING CAPITAL FURNISHED BY THE ASSESSE E BEFORE THE LD. CIT(A) WAS FOUND CONVINCING. THEREFOR E, WE FIND NO JUSTIFICATION TO INTERFERE WITH THE SAME. THI S GROUND OF THE REVENUE IS HAVING NO MERIT, THEREFORE, DISMIS SED. 5 3. THE NEXT GROUND PERTAINS TO DELETION OF ADDITION O F RS.8,65,900/- WHICH WAS PAID IN CASH. WE FIND THAT THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SEC. 40 A(3) OF THE ACT AS THE PAYMENT WAS MADE EXCEEDING RS.20,000/- TO THE SUB-CONTRACTORS. PART OF THE PAYMENT WAS MADE IN CASH AND PARTLY THROUGH BANKING CHANNEL. AS PER THE REVENUE, THE PAYMENT WAS MADE IN VIOLATION OF THE AFORESAID SECTI ON. THE CLAIM OF THE ASSESSEE IS THAT THE PAYMENTS WERE MA DE DUE TO BUSINESS EXIGENCY AND THAT TOO, ON CLOSED HOLI DAYS. THE LD. CIT(A) EXAMINED THE CLAIM OF THE ASSESSEE AND FOUND THAT THE PAYMENTS IN CASH EXCEEDING PRESCRIBED LIMIT WERE MADE ON CLOSED HOLIDAYS/GAZETTED HOLIDAYS/SUNDAY S. HE HAS ALREADY EXAMINED RULE 6DD(J) AND THE COMPELLING CIRCUMSTANCES FOR MAKING SUCH PAYMENTS. THE ASSESSEE HAS, BEFORE US ALSO, EXPLAINED THE SITUATIONS AND THE DAT ES OF PAYMENTS WHICH ARE AVAILABLE AT PAGES 4 & 5 OF THE PAP ER BOOK. THE CALENDAR FOR THE YEAR 2007 WAS ALSO PRODUCED 6 BEFORE THE LD. CIT(A) WHO FOUND THAT THE PAYMENTS WE RE MADE ON THE DAY WHEN THE BANK WAS NOT WORKING. THE ASSESSING OFFICER HAS NOT TRULY EXAMINED THE NATURE OF BUSINESS OF THE ASSESSEE. THE ASSESSING OFFICER DULY EXAMINED THE SUB-CONTRACTORS, WHO APPEARED IN RESPONSE TO SUMMONS ISSUED TO THEM. THEY CONFIRMED TO HAVE RECEIVED THE PART PAYMENTS IN CASH AND PARTLY THROUGH CHEQUES, THUS, THE GENUINENESS OF PAYMENTS IS NOT IN DOUBT. TOTALITY OF FACTS INDICATES THAT THE LD. ASSESSI NG OFFICER WRONGLY INVOKED THE PROVISIONS OF SEC. 40A( 3) OF THE ACT. SUBSTITUTION WAS MADE BY THE 7 TH AMENDMENT IN I.T. RULES, 2008, W.E.F. A.Y. 2009-10. EVEN SUB-CLAUSE (J ) CLEARLY STATES WHERE THE PAYMENT WAS REQUIRED TO BE MAD E ON A DAY ON WHICH THE BANKS WERE CLOSED OR EITHER ON ACCOUNT OF HOLIDAYS OR STRIKE. THUS FACTS CLEARLY IND ICATES THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN INVOK ING THE AFORESAID SECTION, MORE SPECIFICALLY WHEN THE FACTUAL FI NDING 7 RECORDED BY THE LD. CIT(A) WAS NOT CONTROVERTED BY T HE REVENUE AND DID NOT BRING ANY POSITIVE MATERIAL ON RECO RD WHEREAS THE LD. CIT(A) HAS INDIVIDUALLY DEALT WITH EACH AND EVERY PAYMENT AND THE CIRCUMSTANCES UNDER WHICH THE PAYMENTS WERE MADE, THE NATURE OF BUSINESS OF THE ASSESSEE ALONG WITH BUSINESS EXIGENCY, CONSEQUENTLY, W E FIND NO JUSTIFICATION TO INTERFERE WITH THE CONCLUSI ON DRAWN IN THE IMPUGNED ORDER ON THIS ISSUE ALSO. THIS GROUN D IS ALSO DISMISSED. 4. SO FAR THE GROUNDS RAISED IN CROSS-OBJECTION OF TH E ASSESSEE ARE CONCERNED, THESE ARE IN SUPPORT OF THE IMPUGNED ORDER EXCEPT TAKING THE PLEA THAT THE LEGAL IS SUE HAS NOT BEEN DECIDED. HOWEVER, BEFORE US, THE ISSUE OF NON- ADJUDICATION OF LEGAL ISSUE WAS NOT PRESSED. SINCE WE H AVE UPHELD THE IMPUGNED ORDER, THEREFORE, THE CROSS-OBJ ECTION OF THE ASSESSEE DOES NOT SURVIVE, CONSEQUENTLY, DISMI SSED. 8 FINALLY, THE APPEAL OF THE REVENUE AS WELL AS THE CROSS - OBJECTION OF THE ASSESSEE, BOTH ARE DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT TH E CONCLUSION OF THE HEARING ON 7.5.2013. SD SD (R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 7.5.2013 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE !VYS!