ITO, UDAIPUR V. Vishnu Nagda, UDAIPUR

CO 35/JODH/2013

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9714 (ITAT-JODHPUR)
• Duration Of Justice: 7 month(s) 23 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 25-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 16-07-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 02-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Keywords: Opportunity of being heard
• Section: 144

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 125 /JODH/2012 (A.Y. 200 8 - 09 ) ITO , WARD - 1 (4) , VS. SHRI VISHNU NAGDA , UDAIPUR. P ROP. KALESHWAR BHOJANALYA , BHATEWAR CHOURAHAD , TEHSIL VALLABHNAGAR , U DAIPUR. PAN NO. AFCPN 8436 J (APPELLANT) (RESPONDENT) C.O. NO. 35 /JODH/2013 (A.Y. 200 8 - 09 ) SHRI VISHNU NAGDA, VS. ITO, WARD - 1(4), PROP. KALESHWAR BHOJANALYA, UDAIPUR. BHATEWAR CHOURAHAD, TEHSIL VALLABHNAGAR, UDAIPUR. PAN NO. AFCPN 8436 J (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AMIT KOTHARI . DEPARTMENT BY : SHRI N.A. JOSHI - D.R. DATE OF HEARING : 16 / 0 7 /201 4 . DATE OF PRONOUNCEMENT : 25 /0 7 /201 4 . 2 O R D E R PER N.K. SAINI, A.M THE APPEAL BY THE DEPARTMENT AND THE CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 28 / 12 /201 1 OF L D . CIT(A), UDAIPUR . 2 FIRS WE WILL DEAL WITH APPEAL OF THE DEPARTMENT IN I.T.A.NO. 125/JODH/2012. THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: ON THE FACTS AND IN THE PRESENT CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED: - 1. DELETING THE ADDITION OF RS. 2,81,033/ - MADE ON ACCOUNT OF TRADING ADDITION FROM RESTAURANT INCOME. 2. DELETING THE ADDITION OF RS. 57,242/ - MADE ON ACCOUNT OF TRADING ADDITION FROM DAIRY BUSINESS . 3. REDUCING THE ADDITION FROM RS. 26,11,000/ - TO RS. 18,53,203/ - MADE ON ACCOUNT OF UNEXPLAINED DEPOSIT IN BANK ACCOUNT. THAT THE APPELLANT CRAVES TO ADD, AMEND, ALTER, DELETE OR MODIFY ANY OR ALL THE ABOVE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 3. THE FIRST AND SECOND ISSUES VIDE GROUND NOS. 1 & 2 RELATE TO THE DELETION OF ADDITION OF RS. 2,81,033/ - AND RS. 57,242/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF TRADING ADDITION FROM RESTAURANT INCOME AND DAIRY BUSINESS RESPECTIVELY . THESE TWO ISSUES ARE TAKEN SIMULTANEOUSLY. 3 4. FACTS RELATING TO TH E S E ISSUE S , IN BRIEF, ARE THAT THE ASSESSEE HAD SHOWN INCOME OF RS. 1,18,967/ - AS AGAINST GROSS RECEIPTS OF RS. 16,25,857/ - FROM M/S. KALESHWAR BHOJNALYA RESTAURANT THEREBY GIVING NET PROFIT RATE OF 7.31%. AS NO BILLS AND VOUCHERS WERE PRODUCED, THE ASSESSING OFFICER ESTIMATED THE TURNOVER AT RS. 20,00,000/ - AND APPLIED NET PROFIT RATE OF 20%. ACCORDINGLY, THE NET PROFIT WAS INCREASED TO RS. 4,00,000/ - FROM RS. 1,18,967/ - . SIMILARL Y, THE ASSESSEE HAD SHOWN DAIRY INCOME OF RS. 92,758/ - FOR WHICH NO BILLS/VOUCHERS WERE PRODUCED. THE ASSESSING OFFICER INCREASED IT TO RS. 1,50,000/ - AND MADE THE ADDITION OF RS. 57,242/ - . 5. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT THE INCOME FROM RESTAURANT WAS DECLARED ON PRESUMPTIVE BASIS U/S 44AF OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT IN SHORT) AS PER WHICH 5% NET PROFIT RATE WAS APPLICABLE WHILE THE ASSESSEE HAD DECLARED NET PROFIT RATE OF 7.31% ON THE BASIS OF MEMORANDA RECORDS , ROUGH JOTTINGS AND DETAILS AVAILABLE WITH HIM. IT WAS FURTHER STATED THAT THE ASSESSING OFFICER HAD ADOPTED 20% NET PROFIT RATE BASED ON THE ASSESSMENT YEAR 2007 - 08 WHICH WAS NOT APPLICABLE AS IN ASSESSMENT YEAR 2007 - 08 WHICH WAS AN EXPARTE ASSESSMENT ORDER PASSED 4 U/S 144 OF THE ACT. IT WAS CONTENDED THAT THE ASSESSING OFFICER HAD NOT GIVEN ANY BASIS FOR INCREASED TURNOVER AND IN CREASE IN NET PROFIT RATE TO SHOW AS TO HOW THE WORKING SUBMITTED BY THE ASSESSEE WAS LIABLE TO BE REJECT ED. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: - 1. CIT VS. DR. A.P. BAHAL (2008) 2 DTR (RA J.) 387 2. HARIJINDE R SINGH VS. ITO (2010) 122 ITD (ASR) 476 3. GANGA PRASAD VS. CIT (1981) 127 ITR (MP) 6 . AS REGARDS ADDITION ON ACCOUNT OF DAIRY INCOME, IT WAS SUBMITTED THAT THE INCOME WAS OFFERED ON THE BASIS OF MEMORANDA RECORDS, ROUGH JOTTING AND DETAILS AVAILABLE WITH THE ASSESSEE. IT WAS FURTHER STATED THAT THESE BEING TRADITIONAL BUSINESS RUN BY THE ASSESSEE FROM LOCAL CATTLE AS ANCESTRAL BUSINESS WHERE NO CONSISTENCY IN REALIZATION WAS THERE . THE ASSESSING OFFICER HAD INCREASED THE NET PROFIT ON THE BASIS OF EXPARTE ASSESSMENT FOR THE A.Y. 2007 - 08 . IT WAS CONTENDED THAT T HE ASSESSEE EVEN DID NOT APPEAL AND PAID THE TAXES & INTEREST TO AVOID LITIGATION. 7 . THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, OBSERVED THAT THE ASSESSEE HAD FILED THE RETURN OF INCOME U/S 44AF OF THE ACT SHOWING INCOME FROM RESTAURANT, HOWEVER, THE CASE OF 5 THE ASSESSEE DID NOT FALL UNDER THE CATEGORY OF RETAIL TRADE, SO THE PROVISIONS OF SECTION 44AF WERE NOT APPLICABLE IN THIS CASE. THE LD. CIT(A) FURTHER OBSERVED THAT THE ASSESSING OFFICER HAD INCREASED THE TURNOVER FROM RS. 16.25 LAC TO RS. 20 LAC WITHOUT ANY BASIS AND HAD APPLIED NET PROFIT RATE AT 20% ON THE BASIS OF A.Y. 2007 - 08 WHICH WAS PASSED U/S 144 OF THE ACT AS THE ASSESSEE COULD NOT AVAIL THE OPPORTUNITY TO PRESENT HIS CASE , S O, HE HAD ALREADY SUFFERED FOR THAT BY WAY OF PAYING THE TAXES AND INTEREST . THE LD. CIT(A) POINTED OUT THAT THE ASSESSEE HAD PREPARED INCOME & EXPENDITURE ACCOUNT BASED ON THE MEMORANDA RECORD, ROUGH JOTTING AND DETAILS AVAILABLE WITH HIM. HE ALSO POINTED OUT THAT T HE ASSESSING OFFICER HAD NOT GIVEN ANY SPECIFIC REASONS FOR INCREASING THE TURN OVER AND E VEN IN THE EXPARTE ASSESSMENT THERE HAS TO BE SOME MATERIAL TO BE BROUGHT ON RECORD TO JUSTIFY THE DECISION OF THE ADDITION AND TO ESTIMATE THE NET PROFIT , BUT IN THIS CASE, THE ASSESSING OFFICER HAD NOT GATHERED ANY MATERIAL TO SHOW THAT ON THE TURNOVER OF THE ASSESSEE WAS MORE THAN WHAT WAS OFFERED FOR TAXATION. ACCORDINGLY, THE ADDITION MADE BY THE ASSESSING OFFICER WAS DELETED. SIMILARLY, THE ADDITION MADE FOR THE DAIRY INCOME WAS DELETED BY GIVING THE SAME REASONING AS WAS THERE FOR THE RES TAURANT BUSINESS. NOW THE DEPARTMENT IS IN APPEAL. 6 8 . LEARNED D.R. STRONGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER, BUT COULD NOT CONTROVERT THE FINDINGS GIVEN BY THE LD. CIT(A). 9 . IN HIS RIVAL SUBMISSIONS, LEARNED COUNSEL FOR THE ASSESSEE STRONGLY SUPPORTED THE ORDER OF THE LD. CIT(A) AND REITERATED THE SUBMISSIONS MADE BEFORE HIM. 10 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE , IT APPEARS THAT THE ASSESSING OFFICER ESTIMATED THE TURNOVER OF THE ASSESSEE AS WELL AS THE NET PROFIT ON THE BASIS OF PRECEDING ASSESSMENT WHICH WAS EXPARTE AND WAS NOT CHALLENGED BY THE ASSESSEE I N VIEW OF THE CONSTRAIN S , LIMITATION AND TO AVOID LITIGATION. IN THE PRES ENT CASE, THE ASSESSING OFFICER HAD NOT BROUGHT ANY MATERIAL ON RECORD TO SUBSTANTIATE THAT THE TURNOVER OF THE ASSESSEE WAS MORE THAN WHAT WAS DECLARED ON THE BASIS OF MEMORANDA RECORD, ROUGH JOTTING AND DETAILS AVAILABLE WITH HIM. THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER WAS ON THE BASIS OF PRESUMPTION WHICH IS NOT SUSTAINABLE AND THE LD. CIT(A) RIGHTLY DELETED THE SAME . WE DO NOT SEE ANY VALID GROUND TO INTERFERE WITH THE FINDINGS GIVEN BY THE LD. CIT(A). 7 11 . THE NEXT ISSUE VIDE GROUND NO. 3 RELATES TO THE RELIEF ALLOWED OUT OF THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED DEPOSIT IN BANK ACCOUNT. 12. FACTS RELATING TO THIS ISSUE, IN BRIEF, ARE THAT THE ASSESSING OFFICER NOTICED THAT TH E ASSESSEE HAD DEPOSITED A TOTAL AMOUNT OF RS. 26,11,000/ - IN SAVING BANK ACCOUNT AND HAD PURCHASED AGRICULTUR E LAND FOR RS. 18,53,654/ - . THE ASSESSING OFFICER HELD THAT THE CASH HAD BEEN INVESTED MAINLY IN THE PURCHASE OF LAND AND THE ASSESSEE HAD NOT GIVEN ANY SOURCE OF DEPOSITING THE CASH. HE THEREFORE, ADDED RS. 26,11,000/ - U/S 68 OF THE ACT . THE ASSESSING OFFICER ALSO HELD THAT INCOME FROM DAIRY AND AGRICULTURE HAD BEEN UTILIZED FOR HOUSE H OLD AND OTHER EXPENSES. 13 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT THE SALES AND RECEIPTS FROM THE BUSINESS, DAIRY AND AGRICULTURE F ARMING AMOUNTING TO RS. 18,76,872/ - A S AGAINST EXPENSES OF RS. 14,95,802/ - WERE INCURRED. IT WAS STATED THAT THE FUNDS WERE DEPOSITED IN BANK AND WITHDRAW A L S WERE MADE AS PER THE CONVENIENCE AND THE AMOUNT WITHDRAWN FROM THE BA NK WAS REDEPOSITED TO SHOW THE 8 TURNOVER IN THE BANK TRANSACTIONS TO AVAIL THE OVERDRAFT FACILITY. IT WAS FURTHER STATED THAT TEMPORARY ASSISTANCE GIVEN BY THE ASSESSEE TO FRIENDS AND RELATIVES WAS ROUTED THROUGH BANK TRANSACTIONS AND WITHDRAWALS MADE FOR THE PURPOSE OF PURCHASE OF LAND WERE REDEPOSITED IN THE BANK ON ACCOUNT OF TERMINATION OF THE LAND DEA L. THE ASSESSEE FILED THE COPY OF BALANCE SHEET F O R THE A.Y S . 2007 - 08 AND 2008 - 09 IN SUPPORT OF HIS CONTENTION . 14 THE LEARNED CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE WORKED OUT THE PEAK AMOUNT BALANCE IN THE BANK ACCOUNT AT RS. 9,81 ,470/ - . THE ASSESSEE FURNISHED THE DETAILS TO THE LD. CIT(A) WHICH WERE FORWARDED TO THE ASSESSING OFFICER FOR HIS COMMENTS. THE ASSESSING OFFICER OBJECTED THROUGH HIS REMAND REPORT. THE ASSESSEE IN HIS REJOINDER CLAIMED THAT H E WAS ENGAGED IN THE AGRICULTURE FA R MING AND NURSERY AT HIS 9.5 BIGHA OF AGRICULTURAL LAND . HOWEVER, T HE LD. CIT(A) CONFIRMED THE ADDITION TO THE EXTENT OF RS. 18,23,203/ - . NOW THE DEPARTMENT IS IN APPEAL. 15 LEARNED D.R. SUBMITTED THAT THE LD. CIT(A) ALLOWED THE RELIEF WITHOUT APPRECIATING THE FACTS IN RIGHT PERSPECTIVE AND HAD NOT GIVEN THE REASONS FOR ALLOWING THE RELIEF. 9 16 IN HIS RIVAL SUBMISSIONS, LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT ALL THE DETAILS WERE FURNISHED TO THE LD. CIT(A), WHO ASKED THE REMAND REPORT FROM THE ASSESSING OFFICER, THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER WAS NOT JUSTIFIED AND THE LD. CIT(A) RIGHTLY ALLOWED THE RELIEF TO THE A SSESSEE. 17 WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT APPEARS THAT THE DETAILS FURNISHED BEFORE THE LD. CIT(A) WERE NOT AVAILABLE TO THE ASSESSING OFFICER AT THE TIME OF FRAMING THE ASSESSMENT . IT IS ALSO NOT CLEAR HOW THE PEAK WAS WORKED OUT BY THE LD. CIT(A) AND WHAT WAS THE BASIS FOR ACCEPTING THE INCOME FROM OTHER SO URCES AND AGRICULTURAL INCOME. WE THEREFORE, IN THE ABSENCE OF CLEAR FACTS AVAILABLE ON THE RECORD, DEEM IT APPROPRIATE TO SET ASIDE THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO BE ADJUDICATED AFRESH IN ACCORDANCE WITH LAW AFTER PROVIDING DUE AN D REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 18 AS REGARDS TO THE CROSS OBJECTION, WHICH APPEAR S TO BE BARRED BY LIM I T AT ION BY 302 DAYS . LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT 10 HE HAS INSTRUCTIONS NOT TO PRESS THE CROSS OBJECTION AND GAVE IN WRITING AS UNDER: - C.O. NOT PRESSED SD/ - X X X X 16/07 / 2014 IN VIEW OF THE ABOVE, CROSS OBJECTION OF THE ASSESSEE IS DISMISSED AS WITHDRAWN. 19 IN THE RESULT, APPEAL OF THE DEPARTMENT IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED AS WITHDRAWN. ( ORDER PRONOUNCED IN THE COURT ON 25 TH JULY , 201 4) . SD/ - SD/ - ( HARI OM MARATHA ) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 25 TH JULY , 201 4 . VR/ - COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD. CIT 4. THE CIT(A) 5. THE D.R SR. PRIVATE SECRETARY , ITAT, JODHPUR .