Shri Hargovindbhai Tribhovandas Zalariya, Morbi V. The Assistant Commissioner of Income Tax, Central Circle-5, RAJKOT-GUJARAT

CO 16/RJT/2012

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 1959 (ITAT-RAJKOT)
• Duration Of Justice: 3 year(s) 6 month(s) 21 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 04-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-10-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 13-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIMAL I MEHTA
• Assessee Lawyers: RM MANEK
• Keywords: Business income; Depreciation; Income from undisclosed sources; Corroborative evidences
• Section: 40A(3); 144

Judgement Text

ITA NO .06 /RJT/201 2 & C.O. NO.16/RJT/2012 ASSESSMENT YEAR: 20 08 - 09 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [CORAM: PRAMOD KUMAR AM AND RAJPAL YADAV JM ] ITA NO. 06 /RJT/201 2 ASSESSMENT YEAR: 20 08 - 09 ASSTT. COMMISSIONER OF INCOME TAX, ....... ....... ... .. . ... ... .. APP ELLANT CI RCLE - 5, RAJKOT. V S. HARGOVINDBHAI TRIBHOVANBHAI ZALARIY A , .......... . .... ...... ..................RESPONDENT LOOTAVADAR, MORBI. [PAN: AACPZ 9917 D] C.O. NO.16/RJT/2012 (IN ITA NO.06/RJT/2012 ) ASSESSMENT YEAR: 2008 - 09 HARGOVINDBHAI TRIBHOVANBHAI ZALARIY A , ....... . .. .. . .. .......... ...APP ELLANT LOOTAVADAR, MORBI. [PAN: AACPZ 9917 D] VS. ASSTT. COMMISSIONER OF INCOME TAX ......................... .......... ....RESPONDENT CI RCLE - 5, RAJKOT. APPEARANCES BY: VIMAL I. MEHTA FOR THE REVENUE R.M. MANEK, FOR THE A SSESSEE DATE OF CONCLUDING THE HEARING : OCTOBER 07 , 201 5 DATE OF PRONOUNCING THE ORDER : JANUARY 04 , 2016 O R D E R PER PRAMOD KUMAR AM: ITA NO .06 /RJT/201 2 & C.O. NO.16/RJT/2012 ASSESSMENT YEAR: 20 08 - 09 PAGE 2 OF 5 THIS APPEAL AND THE CROSS OBJECTION ARE DIRECTED AGAINST THE ORDER DATED 31 ST OCTOBER, 2011 PASSED BY THE LEARN ED CIT(A), IN THE MATTER OF ASSESSMENT UNDER SECTION 144 OF THE INCOME TAX ACT, 1961 ( THE ACT HEREINAFTER), FOR THE ASSESSMENT YEAR 2008 - 09. 2. IN THE APPEAL, WHICH IS FILED BY THE ASSESSING OFFICER, FOLLOWING GRIEVANCES ARE RAISED : - 1. THE LD CIT(A) - IV, RAJKOT HAS ERRED IN LAW AND ON F ACTS IN T REATING THAT THE AO HAS NOT GIVEN SUFFICIENT OPPORTUNITY TO THE APPELLANT WHILE COMPLETING THE A SS ES SMENT U/S. 144 OF THE ACT. 2. THE LD CIT(A) - IV, RAJKOT HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION M A DE BY THE AO OF RS.36,00,008/ - ON ACCOUNT OF DISALLOWANCE OF SALARY & WAGES, INSURANCE EXPENSES, DEPRECIATION, INTEREST PAID AND OTHER EXPENSES. 3. THE LD CIT(A) - IV, RAJKOT HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE BY THE AO OF RS.20, 62,910/ - ON ACCOUNT OF S UNDRY CREDITORS. 4. ON THE FACT OF THE C A SE AND IN LAW THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE AO. 5. ANY OTHER GROUND THAT THE REVENUE MAY RAISE BEFORE OR DURING HEARING PROCEEDINGS BEFORE THE HON BLE I T AT. 6. IT IS , THERE F ORE , PRAYED THAT TH E ORDER OF THE CIT(A) - I V, RAJKOT MAY KINDLY BE SET - ASIDE AND T H A T OF AS S ESSING OFFICER BE RESTORED. 3. BRIEFLY STATED, THE RELEVANT MATERIAL FACTS ARE LIKE THIS. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DIAMOND POLISHING J OB WORK. THE ASSESSEE FILED AN INCOME TAX RETURN DISCLOSING THE BUSINESS INCOME OF RS.5,63,480/ - AND AGRICULTURAL INCOME OF RS.2,55,190/ - WHICH WAS SELECTED FOR SCRUTINY ASSESSMENT. HOWEVER, AS THERE WAS NO ITA NO .06 /RJT/201 2 & C.O. NO.16/RJT/2012 ASSESSMENT YEAR: 20 08 - 09 PAGE 3 OF 5 COMPLIANCE TO THE NOTICES FOR HEARING, THE ASSE SSING OFFICER PROCEEDED TO FRAME AN EXPARTE BEST JUDGEMENT ASSESSMENT UNDER SECTION 144 OF THE ACT. IN THE COURSE OF THIS ASSESSMENT, THE ASSESSING OFFICER DISALLOWED EXPENDITURE OF RS.36,00,008/ - FOR WANT OF SUPPORTING DETAILS, ADDED THE STATED AGRICULTU RAL INCOME OF RS.2,55,190/ - AS INCOME FROM UNDISCLOSED SOURCES SINCE THE AGRICULTURAL INCOME COULD NOT BE VERIFIED AND ADDED SUNDRY CREDITORS OF RS.20,62,910/ - AS UNDISCLOSED INCOME OF THE ASSESSEE. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). IT WAS CONTENDED THAT THE NOTICE OF HEARING FOR 10 TH NOVEMBER 2010 WAS NEVER RECEIVED BY THE ASSESSEE. AS FOR THE DETAILS OF EXPENSES AND SUPPORTING EVIDENCES, THE ASSESSEE FURNISHED THE SAME BEFORE THE LD. CIT(A). AS FOR THE SUNDRY CRED ITORS, IT WAS SUBMITTED THAT THE SUNDRY CREDITORS FOR AMOUNTS AGGREGATING TO RS.18,06,720/ - , THE SAME REPRESENTED OPENING BALANCES. THE COPY OF ACCOUNT, LOAN CONFIRMATION WERE ALSO FURNISHED IN RESPECT OF THE REMAINING CREDITORS. LEARNED CIT(A) CALLED FO R A REMAND REPORT ON THE SUBMISSIONS OF THE ASSESSEE AND AFTER EXAMINING ALL THE MATERIAL, CONCLUDED AS FOLLOWS : - 6.1 I HAVE GONE THROUGH THE ASSE SS MENT OR D ER, SUBMISSIONS OF A PPELLANT A ND ASSE S SING OFFICER. I FIND TH A T ASSESSING OFFICER HA S SUBMITTE D THE PROOF OF SERVICE OF NOTICE U/S 271(1)(B) DATE D 10.11.2010 WHICH CANNOT BE A NOTICE U/S 144. THEREFORE THE CLAIM OF A PPELLANT THAT HE DID NOT RECEIVE ANY NOTICE FROM ASSESSING OFFICER GIVING LAST OPPORTUNITY TO SUBMIT DETAILS OTHERWISE ASSESSMENT MAY BE MADE TO THE BEST OF JUDGEMENT OF THE ASSESSING OFFICER APPEARS TO BE CORRECT . I THEREFORE HOLD THAT THE ASSESSMENT U/S 144 WAS MADE BY THE ASSESSING OFFICER WITHOUT GIVING SUFFICIENT OPPORTUNITY TO APPELLANT BEFORE MAKING ASSE SSMENT U /S 144. 6.2 THE ASSESSING OFFICER HAS ACCEPTED THE CLAIM OF EXPENDITURE OF SALARY & WAGES EXP. O F RS.206210/ - , INSURANCE EXP. OF R.43757/ - , DEPRECIATION EXP. O F RS.259446/ - , OTHER EXP. OF RS.3029983/ - AND INTEREST EXP. O F RS.60612/ - IN REMAND REPORT AS PER THE EVIDENCES S UBMITTED BY THE APPELLANT BEFORE HIM. THEREFORE THE ADDITION OF RS.36,00,008/ - MADE BY HIM IN ASSESSMENT O RD ER IS DELETED. 6.3 THE ASSESSING OFFICER HAS SUBMITTED THAT THE SUNDRY CREDITOR BALANCES AGAINST THE NAMES OF KANTILAL CHHAGAN VANAGARA FOR R.463 320/ - , SUNDARJI KHIMJI ZALARIA FOR RS.420220/ - , CHHAGAN BHANJI GADHIYA FOR RS.4795 20/ - , MAAHESH MAGAN ITA NO .06 /RJT/201 2 & C.O. NO.16/RJT/2012 ASSESSMENT YEAR: 20 08 - 09 PAGE 4 OF 5 SUNVAIRY A FOR RS.443720/ - , NITINBH A I LIMB A BHAI FOR RS.106130/ - PERTAINED TO THE PERIOD PRIOR TO THE YEAR UNDER CONSIDERATION AND CANNOT BE CONSIDERED FOR CASH CREDIT IN THE ASSESSMENT YEAR UNDER APPEAL IN HIS REMAND REPORT . THE ONLY CREDITOR IS SHRI MANSUKHBHI CHATURBHI OF PIPALI A WHO HAD GIVEN A LOAN OF RS.150000/ - TO APPELLANT. ASSESSING OFFICER HAS NO T COMMENTED ANYTHING ADVERSE IN RESPECT OF CONFIRMAT ION SUBMITTED BY THIS LENDER OF LOAN EXCEPT THAT APPELLANT SHOULD HAVE SHOWN HIM A S LENDER OF LO A N RATHER THAN SUNDRY CREDITOR. THEREFORE I FIND THAT THE ADDITION OF RS.20,62, 910/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED SUNDRY CREDITOR IS UNWARRANTED BECAUSE ALL BUT ONE CREDITOR IS EXPLAINED FROM PAST RECORDS AND ONE CREDITOR HAS FILED THE CONFIRMATION WHICH WAS ACCEPTABLE TO ASSESSING OFFICER DURING REMAND PROCEEDINGS. THEREFORE THE ADDITION OF RS.20,62,910/ - MAD BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER IS DELETED. 6.4 ASSESSING OFFICER HAS REFERRED TO A NEW ISSUE DURING THE APPELLATE PROCEEDING AFTER EXAMINING THE BOOKS OF ACCOUNT OF APPELLANT. ASSESSING OFFICER STATED THAT APPELLANT HAS PAID RS. 105000/ - IN CASH TO SHRI NIITINB H A I LIMBASIA IN EXCESS OF R S.20000/ - TO SHRI NITINBH A I LIMBASIA FOR J OB WORK PAYMENT. HOWEVER , APPELLANT HAS CLARIFIED THAT THERE IS NO BANKING FACILITY IN THE VILLAGE LOTAVADAR WHERE SH R I NITINBHI LIMBASIA RESIDES AND SHRI NAITINBHI LIMBASIA DID NOT HAVE ANY BANK ACCOUNT. APPELLANT SUBMITED CONFIRMATION OF SHRI NITINBH A I LIMBASI A IN THIS REGARD. I FIND THAT THE CIRCUMSTANCES IN RESPECT OF PAYMENT IN CASH TO SHRI NITINBHAI LIMBASI A ARE COVERED UNDER RULE 6DD(G) OF THE I.T. RULE S AND THEREFORE THERE IS NO NEED TO MAKE ANY DISALLOWANCE U/S 40A(3) IN THIS REGARD. 4. THE ASSESSING OFFICER IS AGGRIEVED OF RELIEF SO GIVEN BY THE LEARNED CIT(A) AND IS IN APPEAL BEFORE US. 5. HAVING HEARD THE RIVAL CONTENTIONS, AND HAVING PERUSED THE MATERIAL ON RECORD, WE ARE NOT INCLINED TO DISTURB THE WELL - REASONED ORDER OF THE LD. CIT(A). WHEN THERE IS NO EVIDENCE OR SERVICE OF NOTICE, CALLING UPON THE ASSESSEE TO SHOW CAUSE AS TO WHY ASSESSMENT NOT BE FRAMED UNDER SECTION 144, THERE CANNOT BE ANY OCCASION TO HOLD THAT VAL IDITY OF SUCH A BEST JUDGEMENT ASSESSMENT. AS FOR THE SUPPORTING EVIDENCES IN SUPPORT OF DEDUCTION FOR EXPENSES, IT IS AN UNDISPUTED POSITION THAT A REMAND REPORT WAS DULY CALLED FROM THE ASSESSING OFFICER AND HAS BEEN FAIRLY CONSIDERED. COMING TO THE SU NDRY CREDITORS HAVING BEEN ADDED BACK, ONCE THERE ARE FOUND TO BE EITHER OPENING BALANCES OR DULY SUPPORTED BY CONFIRMATION, THE STAND OF LD. CIT(A) CANNOT BE FAULTED. ITA NO .06 /RJT/201 2 & C.O. NO.16/RJT/2012 ASSESSMENT YEAR: 20 08 - 09 PAGE 5 OF 5 ON ALL THE ISSUES, THEREFORE, LEARNED CIT(A) S ACTION WAS JUSTIFIED AND VERY WELL - REASO NED. WE APPROVE THE SAME AND DECLINE TO INTERFERE IN THE MATTER. 6. AS FOR THE CROSS OBJECTION, LEARNED COUNSEL STATES THAT THE MATTER WAS NOT EXAMINED ON MERITS BY THE LD. CIT(A) AND HE IS WRONG IN OBSERVING THAT THE ASSESSEE DID NOT PRESS THE SAME. HE INVITES OUR ATTENTION TO THE SUPPORTING EVIDENCES, TO SHOW THE NATURE OF INCOME BEING AGRICULTURAL INCOME, AT PAGES 36 TO 48 OF THE PAPER BOOK. WITH THE CONSENT OF THE PARTIES, THE MATTER IS REMITTED TO THE FILE OF THE LD. CIT(A) FOR ADJUDICATION ON MERI TS ON THIS ISSUE. 7. IN THE RESULT, WHILE APPEAL IS DISMISSED, C ROSS OBJECTION IS ALLOWED FOR STATISTICAL PURPOSES IN THE TERMS INDICATED ABOVE . PRONOUNCED IN THE OPEN COURT ON TH E 4 TH DAY OF JANUARY, 201 6 . SD/ - SD/ - RAJAPAL YADAV PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED: 4 TH DAY OF JANUARY , 201 6 COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FI LE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT