Shri Pradeep Shantilal Patel, Ahmedabad V. The Income tax Officer,Ward-13(4), Ahmedabad

CO 190/AHD/2010

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8263 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 5 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 21-02-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 07-02-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 16-07-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D K SINGH
• Assessee Lawyers: S N DIVATIA
• Keywords: Business income; Salary income; Peak credit

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD , .!' # , $% $ & BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A. NO.1519/AHD/2010 ( ' ' (' / ASSESSMENT YEAR : 2007-08) THE ITO WARD-13(4) AHMEDABAD ' / VS. SHRI PRADEEP SHANTILAL PATEL 1/7, SHITVAM APTS. HIRAWADI, SAIJPUR BOGHA AHMEDABAD ./ ./ PAN/GIR NO. : APLPP 0004 R ( / APPELLANT ) .. ( / RESPONDENT ) AND CO NO.190/AHD/2010 A.Y. 2007-08 (ARISING IN ITA NO.1519/AHD/2010) SHRI PRADEEP SHANTILAL PATEL VS. THE ITO, WARD-13 (4) AHMEDBAAD AHMEDAB AD ( CROSS OBJECTOR ) .. ( RESPONDENT ) REVENUE BY : SHRI D.K. SINGH, SR.D.R. ASSESSEE BY : SHRI S.N. DIVATIA / DATE OF HEARING : 07/02/2013 !' / DATE OF PRONOUNCEMENT : 21/2/13 #$ / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THE REVENUE HAS CHALLENGED THE ORDER OF THE LD.CIT (A)-XXI, AHMEDABAD DATED 04/02/2010 AND THE RESPONDENT-ASSE SSEE FILED THE CROSS-OBJECTION. ITA NO.1519/AHD/2010 (BY REVENUE) AND CO NO.190/AHD/2010 (BY ASSESSEE ) ITO VS. SHRI PRADEEP SHANTILAL PATEL ASST.YEAR - 2007-08 - 2 - 2. THE REVENUE HAS RAISED FOLLOWING THREE SUBSTANTI VE GROUNDS; REPRODUCED BELOW:- 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACT S IN RESTRICTING THE ADDITION MADE ON ACCOUNT OF INCOME FROM UNDISCL OSED SOURCE OF RS.35,33,414/- TO RS.1,80,000/-. 2. THE LEARNED CIT(A) SHOULD NOT HAVE ACCEPTED THE ASSESSEES VERSION THAT THE SALE PROCEEDS PERTAINING TO HUF AR E DEPOSITED WITH ASSESSEES BANK ACCOUNT, HENCE, THE SAME ARE T O BE TREATED AS UNACCOUNTED SALES AND ONLY G.P. U/S.44AF TO BE TAKE N FOR TAX PURPOSE. 3. THE LEARNED CIT(A) HAS NOT APPRECIATED THE FACT THAT THE PASS BOOK ENTRIES ARE NOT SELF EXPLANATORY ABOUT THE ALL EGED PURCHASES AND SALE, HENCE, THE CASH DEPOSITS SHOULD NOT HAVE BEEN TREATED AS THE DEPOSITS OF SALES. 2.1. IN THE CROSS OBJECTION, THE ASSESSEE HAS RAISE D THE FOLLOWING GROUND:- 1. WITHOUT PREJUDICE TO THE ABOVE, AND IN THE ALTE RNATIVE, EVEN IF IT IS PRESUMED THAT CASH DEPOSITS IN THE SAID BANK A/C . DID NOT PERTAIN TO THE RETAIL TRADE OF THE HUF, ONLY PEAK CREDIT CO ULD BE BROUGHT TO TAX IN THE HANDS OF A REAL OWNER AND NOT THE AGGREG ATE CASH DEPOSITS. 3. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDIN G ASSESSMENT ORDER PASSED U/S.143(3) DATED 16.12.2009 WERE THAT THE ASSESSEE IN INDIVIDUAL CAPACITY IS EARNING SALARY INCOME. IT W AS NOTED BY THE AO THAT THE ASSESSEE HAD MADE SEVERAL CASH DEPOSITS ON DIFF ERENT DATES TOTALLING TO RS.22,49,410/ IN THE SAVING BANK ACCOUNT WITH AMARN ATH CO-OPERATIVE BANK LTD. THE AO HAS LISTED THE AMOUNT OF THE DEPO SITS ALONG WITH THE DATES OF THE DEPOSITS IN THE IMPUGNED ASSESSMENT OR DER. ITA NO.1519/AHD/2010 (BY REVENUE) AND CO NO.190/AHD/2010 (BY ASSESSEE ) ITO VS. SHRI PRADEEP SHANTILAL PATEL ASST.YEAR - 2007-08 - 3 - 3.1. THE ASSESSEES BASIC CONTENTION WAS THAT THE S AID ACCOUNT BELONGED TO THE HUF OF THE ASSESSEE AND NOT THE INDIVIDUAL. HOWEVER, THE AO WAS NOT CONVINCED PRIMARILY ON THE GROUND THAT EVEN AFT ER GRANTING SEVERAL OPPORTUNITIES OF HEARING THE ASSESSEE HAD NOT SUBST ANTIATED THAT THE SAID ACCOUNT BELONGED HIS HUF. BRIEFLY, THE AO HAD CONC LUDED THAT THE APPELLANT HAD ALTHOUGH FILED THE RETURN OF HUF BUT BELATEDLY. THE AO HAS NOT ACCEPTED THAT THE IMPUGNED TRANSACTION PERT AINED TO THE RETAIL TRADE IN IRON SCRAP BUSINESS. THEREFORE, THE ENTIR E CASH WAS TAXED IN THE HANDS OF THE ASSESSEE. 4. THE MATTER WAS CARRIED BEFORE THE FIRST APPELLAT E AUTHORITY WHO HAS HELD THAT THE ASSESSEE HAD FAILED TO SUBSTANTIATE T HE CLAIM THAT THE TRANSACTION RECORDED IN THE SAID BANK ACCOUNT WAS I N THE STATUS OF HUF. THEREFORE, HE HAS HELD THAT THE CLAIM OF THE ASSESS EE THAT THE BUSINESS OF IRON SCRAP BELONGED TO HUF WAS AN AFTER THOUGHT. U PTO THIS EXTENT, THE ASSESSEES CLAIM WAS DISMISSED. ABOUT THE AMOUNT O F INCOME TO BE TAXED IN THE HANDS OF THE INDIVIDUAL, THE LD.CIT(A) HAS G RANTED PART RELIEF AND RESTRICTED THE ADDITION TO RS.1.80 LACS AFTER ASSIG NING FOLLOWING REASONS:- 4.3. NOW COMING TO THE NEXT CONTENTION OF THE APPE LLANT THAT THE TRANSACTIONS IN THE SAID BANK A/C WERE RELATED TO T HE IRON SCRAP BUSINESS, IT WAS REJECTED BY AO SIMPLY FOR THE REAS ON THAT SALES CANNOT PRECEDE THE PURCHASES BECAUSE SALES (CREDIT) COMES FIRST BEFORE THE PURCHASE (DEBIT) IN THE BANK A/C. HOWEV ER FROM THE PERUSAL OF THE BANK STATEMENT AS PRODUCED IN THE PA PER BOOK AT PAGE 3-7 THAT THE MODUS OPERANDI ADOPTED BY THE APP ELLANT SEEMS TO BE DEPOSITING CASH EITHER A DAY BEFORE OR ON THE SAME DAY AND THE CHEQUE FOR THE PAYMENT GETTING CLEARED AGAINST SUCH AMOUNT. IT IS ALSO OBSERVED THAT THE CASH DEPOSITS ARE ALMO ST EQUAL TO THE AMOUNTS TO BE PAID/CHEQUES TO BE CLEARED AND THE BA NK BALANCE IS ITA NO.1519/AHD/2010 (BY REVENUE) AND CO NO.190/AHD/2010 (BY ASSESSEE ) ITO VS. SHRI PRADEEP SHANTILAL PATEL ASST.YEAR - 2007-08 - 4 - A MEAGER AMOUNT NOT EXCEEDING RS.1,000/- (EXCEPT IN COUPLE OF INSTANCES). THE MANNER OF CARRYING OUT BOTH CREDIT AND DEBIT TRANSACTIONS CLEARLY INDICATE THAT PAYMENTS HAVE BE EN MADE TO THE DIFFERENT PARTIES OUT OF CASH DEPOSITED WHICH IS CL AIMED BY THE APPELLANT FROM THE SALE PROCEEDS. IN THIS VIEW OF THE MATTER, SALES (CREDIT) WILL PRECEDE THE PURCHASES (DEBIT) IN THE BANK ACCOUNT. THE CONTENTION OF THE APPELLANT IS THAT THE CASH DE POSITS HAVE BEEN MADE OUT OF SALE PROCEEDS OF RETAIL TRADE AND PURCH ASERS HAVE BEEN PAID OUT OF IT AT A LATER DATE. IT AFTER ALL DEPENDS UPON THE TERMS AND CONDITIONS OF THE SALE BETWEEN THE TWO PA RTIES. THE APPELLANT HAS RIGHTLY CONTENDED THAT THE PAYMENT FO R THE PURCHASES COULD BE AT LATER DATE BUT THE GOODS CANNOT BE DELI VERED OR SOLD WITHOUT MAKING ITS PURCHASES UNLESS IT IS A FORWARD TRANSACTION. THE PAYMENT FOR THE PURCHASES MAY PRECEDE THE SALE OR SUBSEQUENT TO IT DEPENDING UPON THE TERMS AND CONDITIONS BETWE EN THE CONCERNED PARTIES. THEREFORE IN THE PRESENT CASE T HE CONTENTION OF THE APPELLANT THAT THE TRANSACTIONS IN THIS BANK A/ C PERTAIN TO HIS BUSINESS DESERVES TO BE ACCEPTED BUT STILL THERE WO ULD BE A QUESTION OF DETERMINING INCOME IN RESPECT OF THESE TRANSACTIONS. THERE IS NO EVIDENCE ON RECORD EXCEPT THE STATEMENT OF THE APPELLANT WITH REGARD TO THE NATURE OF BUSINESS CAR RIED ON BY HIM AND THE DETAILS RELATING TO THE COMPUTATION OF INCO ME. THE APPELLANT HAS FILED RETURN OF INCOME ON 13.08.2009 DECLARING INCOME OF RS.1,76,660/- U/S.44AF IN RESPECT OF THE TRANSACTIONS APPEARING IN THIS BANK A/C. IN VIEW OF SUCH STATEM ENT MADE BY THE APPELLANT IN HIS RETURN OF INCOME UNDER DUE VERIFIC ATION AND THERE BEING NO OTHER EVIDENCE TO DISBELIEVE IT, I AM INCL INED TO ACCEPT AS THE TRANSACTION RELATING TO RETAIL TRADE. BUT THE DOCUMENTS RELATING TO THIS BUSINESS SUCH AS SALES PURCHASE INVOICES, B OOKS ETC. NEITHER MAINTAINED NOR PRODUCED BY THE APPELLANT, THE BOOK RESULT DECLARED BY THE APPELLANT CANNOT BE ACCEPTED EVEN T HE MOST OF THE CREDITS (SALES) ARE MATCHING WITH THE DEBITS (PURCH ASES) WHICH SHOWS THAT THE APPELLANT HAS NOT DEPOSITED ENTIRE S ALE PROCEEDS IN THIS BANK A/C. THEREFORE I HAVE NO ALTERNATIVE BUT TO ESTIMATE INCOME BY ESTIMATING THE SALES. THE TOTAL TURNOVER OF THE APPELLANT IN THIS BUSINESS IS ESTIMATED AT RS.36 LACS AND THE NET INCOME U/S.44AF WOULD WORK OUT TO RS.1.80 LACS. ACCORDING LY THE ADDITION OF RS.35,33,414/- IN RESPECT OF CASH DEPOSITED IN T HE BANK A/C AS ITA NO.1519/AHD/2010 (BY REVENUE) AND CO NO.190/AHD/2010 (BY ASSESSEE ) ITO VS. SHRI PRADEEP SHANTILAL PATEL ASST.YEAR - 2007-08 - 5 - UNDISCLOSED INCOME IS HEREBY RESTRICTED TO RS.1.80 LACS BUT BY WAY OF BUSINESS INCOME FROM RETAIN TRADE OF THE APPELLA NT. 5. WE HAVE HEARD BOTH THE SIDES. LD.SR.DR MR.D.K.S INGH HAS PLACED RELIANCE ON THE ORDER OF THE AO, HOWEVER, ON THE OT HER HAND LD.AR MR.DIVATIA HAS PLACED PART RELIANCE ON THE ORDER OF THE CIT(A). ALTHOUGH BOTH THE SIDES HAVE CHALLENGED THE PART RELIEF GRAN TED BY LD.CIT(A), BUT IT WAS NOT CONTESTED THAT THE AMOUNTS IN QUESTION FOU ND TO BE DEPOSITED IN A BANK ACCOUNT HAVE REPRESENTED THE BUSINESS RECEIPTS . BECAUSE OF THIS REASON, WE ARE ALSO OF THE VIEW THAT THE ENTIRE AMO UNT IS NOT TO BE TAXED AS UNACCOUNTED BUSINESS INCOME OF THE ASSESSEE. IF IT IS INEVITABLE DUE TO NON AVAILABILITY OF CERTAIN EVIDENCES OR FACTS, THE N A BEST JUDGEMENT HAS TO BE MADE WITHOUT ANY BIAS BUT ON A RATIONAL BASIS BY ESTIMATING A REASONABLE AMOUNT OF TAXABLE PROFIT. THIS EXCEPTIO NAL POWER, ALTHOUGH, HAS TO BE EXERCISED SPARINGLY BUT ALSO WITH CAUTION . WE ARE, THEREFORE, OF THE OPINION THAT THE ISSUE BEING NOT COMPLICATED, T HE LD.CIT(A) HAS RIGHTLY EXERCISED HIS POWER OF ESTIMATION AND RESTR ICTED THE ADDITION TO RS.1.80 LACS. WE FIND NO REASON TO INTERFERE WITH THOSE FINDINGS OF LD.CIT(A), HENCE APPROVE THE SAME BY REJECTING THE CONNECTED GROUND OF THE REVENUE. 6. WE HAVE ALREADY TAKEN A DECISION THAT THE AMOUNT SO DETERMINED BY THE LD.CIT(A) IS REQUIRED TO BE ASSESSED IN THE HANDS OF THE ASSESSEE IN THE STATUS OF INDIVIDUAL, THEREFORE WE HEREBY AFFIR M AN ANOTHER FINDING OF LD.CIT(A) THAT THE CLAIM OF THE BUSINESS IN THE STA TUS OF HUF WAS INCORRECT. DUE TO THIS REASON, GROUND NO.2 OF THE REVENUE DEPARTMENT IS ITA NO.1519/AHD/2010 (BY REVENUE) AND CO NO.190/AHD/2010 (BY ASSESSEE ) ITO VS. SHRI PRADEEP SHANTILAL PATEL ASST.YEAR - 2007-08 - 6 - NON-MAINTAINABLE, HENCE DISMISSED. LIKEWISE, WE FI ND NO FORCE IN GROUND NO.3 OF THE REVENUE IN THE LIGHT OF THE ABOV E DISCUSSION. 7. AS FAR AS CROSS OBJECTION OF THE ASSESSEE IS CONCERNED, SINCE A VIEW HAS ALREADY TAKEN THAT THE PART RELIEF WAS RIGHTLY GRANTED AND THE INCOME BELONGED TO THE ASSESSEE IN INDIVIDUAL CAPACITY, TH EREFORE, THE OBJECTION RAISED IN THE CROSS OBJECTION OF THE ASSESSEE IS HE REBY REJECTED. 8. IN THE RESULT, REVENUES APPEAL AS ALSO CROSS OB JECTION OF THE ASSESSEE BOTH ARE DISMISSED. SD/- SD/- ( %.& ' &(' ) ( & & ) ) # *+ # ( A. MOHAN ALANKAMONY ) ( MUKU L KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 21/ 02 /2013 ,.., .+../ T.C. NAIR, SR. PS $* + ,-. /$.( / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. . /0 1 / CONCERNED CIT 4. 1 () / THE CIT(A)-XXI, AHMEDABAD 5. 456 ++/0, /0', '&#.# / DR, ITAT, AHMEDABAD 6. 678 9 / GUARD FILE. $*' / BY ORDER, 4 + //TRUE COPY// 0/ 1 ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD