Income Tax Officer-3(2), Lucknow V. Shri Harikesh Gupta, Lucknow

ITA 102/LKW/2015

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1000 (ITAT-LUCKNOW)
• Duration Of Justice: 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-06-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 02-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROHIT BHALLA F
• Keywords: Business income; Revised return
• Section: 44AD; 194C; 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.102/LKW/2015 ASSESSMENT YEAR:2011 - 12 SHRI HARIKESH GUPTA, L - 6/209, SECTOR - M, ALIGANJ, LUCKNOW. PAN:AOJPM5273N VS INCOME TAX OFFICER - 3(2), LUCKNOW. (RESPONDENT) (APPELLANT) SHRI AMIT NIGAM , D. R. APPELLANT BY SHRI ROHIT BHALLA, F.C. A. RESPONDENT BY 16/06/2015 DATE OF HEARING 23 /07/2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT(A) - I, LUCKNOW DATED 11/11/2014 FOR THE ASSESSMENT YEAR 2011 - 12. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1. THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.27,55,000/ - TREATING THE SAID SUM TO BE BUSINESS RECEIPTS AND NOT AS CASH CREDIT U/S 68 OF THE I.T. ACT. 1961. 2. THE ORDER OF LD. CIT (A) IS BAD IN LAW AND PREJUDICIAL TO THE INTEREST OF REVE NUE. THE LD. CIT (A) HAS ALLOWED THE RELIEF TO THE ASSESSEE WITHOUT CONSIDERING THE FULL FACTS AND CIRCUMSTANCES OF THE CASE. 3. LEARNED D. R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A. R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEA RNED CIT(A). 2 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT IN THE PRESENT CASE , THE ADDITION WAS MADE BY THE ASSESSING OFFICER OF RS.27.55 LAC S WITH REGARD TO CASH DEPOSITED IN S/B BANK ACCOUNT WITH KOTAK MAHINDRA BANK . THIS WAS THE ASSERTI ON OF THE ASSESSEE BEFORE THE ASSESSING OFFICER ALSO THAT THE ASSESSEE HAS TOTAL BUSINESS RECEIPTS AS PER RETURN OF INCOME AS RS.43,32,450/ - AND OUT OF THIS, THERE IS CASH DEPOSIT S IN BANK OF RS.25.55 LAC AND RS.2.23 LAC IN S/B ACCOUNTS AND RS.9.99 LAC IN CURRENT BANK ACCOUNT. THE ASSESSING OFFICER HAS NOTED ON PAGE NO. 2 THAT AS PER THE ASSESSEE , TOTAL DEPOSITS OF RS.39.68 LAC IN BANK ACCOUNT SHOULD BE TREATED AS BUSINESS RECEIPTS AND ACCORDINGLY NET PROFIT U/S 44AD CAN BE COMPUTED @8% WHICH WORKS OUT TO RS.3,14,440/ - . THE ASSESSING OFFICER DID NOT ACCEPT THIS CLAIM OF THE ASSESSEE AND MADE THE ADDITION OF ENTIRE AMOUNT. THE CIT(A) HAS DECIDED THE ISSUE AS PER PARA 4 OF HIS ORDER AND IT WAS HELD THAT THIS DEPOSIT IN BANK ACCOUNT OF RS.39.68 LAC INCLUDING CHEQUE DEPOSIT OF RS.2.23 LAC IS BUSINESS RECEIPT AND BY APPLYING NET PROFIT RATE OF 8% U/S 44AD, HE DIRECTED THE ASSESSING OFFICER TO ASSESS THE BUSINESS INCOME OF THE ASSESSEE AT RS.3,17,440/ - INSTEAD OF RS.2,59,500/ - DECLARED BY THE ASSESSEE AND THE ADDITION MADE BY ASSESSING OFFICER WAS DELETED BY CIT(A). THE RELEVANT PARA OF CIT(A) IS PARA 4, WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - 4. I HA VE CONSIDERED THE MATTER. ON PERUSAL OF THE RETURNS FILED BY THE APPELLANT FOR ASSESSMENT YEAR 2009 - 10 & 2010 - 11, IT IS NOTED THAT THE NATURE OF BUSINESS CARRIED ON BY THE APPELLANT IS MENTIONED AS INTERIOR DECORATION AND CIVIL CONTRACT WORK. FURTHER, BU SINESS INCOME HAS BEEN DISCLOSED BY THE APPELLANT U/S 44AD @ 8% OF TOTAL TURNOVER. IT IS ALSO NOTED THAT THE ORIGINAL RETURN FOR THE IMPUGNED AY 2011 - 12 HAS BEEN FILED IN ITR - 4S DISCLOSING INCOME FROM BUSINESS AT RS.2,59,500/ - . THE REVISED RETURN WAS FILED ON 22.09.2011 DISCLOSING THE SAME BUSINESS INCOME OF RS.2,59,500/ - @ 8% OF GROSS RECEIPTS OF RS.32,43,750/ - . IN THE ORIGINAL RETURN THE APPELLANT HAS DISCLOSED THE SAVINGS BANK A/C NO. 3922 WITH THE KOTAK MAHINDRA BANK AND IN THE REVISED RETURN THE APPELL ANT HAS MENTIONED HIS OBC CURRENT ACCOUNT NO. 2102. IN THE RETURN THE APPELLANT HAS SHOWN BUSINESS CODE AS 0607 AND TRADE NAME AS 'INTERIOR DECORATION AND CIVIL CONTRACT WORK'. ON 3 PERUSAL OF FORM 26AS FOR AY 2011 - 12 IT IS SEEN THAT THE APPELLANT HAS RECEIV ED TWO PAYMENTS OF RS.1 LAKH EACH AND ANOTHER TWO PAYMENTS OF RS.2 LAKH EACH, TOTAL AMOUNTING TO RS.6 LAKH FROM DAYAL PARADISE ON WHICH TAX OF RS.6,000/ - HAS BEEN DULY DEDUCTED U/S 194C OF THE ACT. PAYMENTS RECEIVED FROM DAYAL PARADISE HAVE BEEN DEPOSITED IN THE KOTAK MAHINDRA BANK ACCOUNT WHICH INDICATES THAT THE SAID ACCOUNT WAS USED FOR DEPOSITING BUSINESS RECEIPTS. IT IS ALSO NOTED THAT THE RETURNS FOR AYS 2012 - 13 AND 2013 - 14 ARE AUDITED RETURNS IN WHICH NATURE OF BUSINESS IS MENTIONED AS CIVIL CONTRACT OR AND INTERIOR DESIGNER AND TAX HAS BEEN DULY DEDUCTED BY THE PAYERS. IT IS ALSO FOUND THAT CASH DEPOSITS AND WITHDRAWALS HAVE BEEN MADE REGULARLY IN THE KOTAK MAHINDRA BANK ACCOUNT WHICH INDICATES THAT THE BUSINESS OF WORK CONTRACT HAS BEEN CARRIED OUT B Y THE APPELLANT THROUGHOUT THE YEAR ON REGULAR BASIS AND AT THE END OF THE YEAR VERY SMALL AMOUNT IS LEFT IN THE BANK ACCOUNT THE APPELLANT HAS SUBMITTED DETAILED STATEMENT EXPLAINING THE DEBIT AND CREDIT ENTRIES IN BOTH THE BANK ACCOUNTS AT THE KOTAK MAHI NDRA BANK AND THE ORIENTAL BANK OF COMMERCE. FURTHER THE AO DID NOT RELY ON ANY MATERIAL EVIDENCE TO HOLD THAT THE DEPOSITS MADE IN THE KOTAK MAHINDRA ACCOUNT WERE UNEXPLAINED OR UNDISCLOSED INCOME OF THE ASSESSEE. IN THE CASE OF CIT V. SURINDER PAL ANAND, (ITA NO. 156 OF 2010 DATE OF DECISION 29.06.2010) THE HON'BLE PUNJAB & HARYANA HIGH COURT HAS HELD THAT ONCE UNDER THE SPECIAL PROVISION, EXEMPTION FROM MAINTAINING BOOKS OF ACCOUNT HAS BEEN PROVIDED AND PRESUMPTIVE TAX @ 8% OF THE GROSS RECEIPT ITSELF IS THE BASIS FOR DETERMINING THE TAXABLE INCOME, THE ASSESSEE WAS NOT UNDER OBLIGATION TO EXPLAIN INDIVIDUAL ENTRY OF CASH DEPOSIT IN THE BANK UNLESS SUCH ENTRY HAD NO NEXUS WITH THE GROSS RECEIPTS. IN VIEW OF THE ABOVE, THERE IS NO DOUBT THAT THE APPELLANT IS A CONTRACTOR ENGAGED IN PAINTING AND INTERIOR DECORATION WORK AND HE HAS DEPOSITED HIS BUSINESS RECEIPTS IN THE TWO BANK ACCOUNTS. IT IS, THEREFORE, HELD THAT THE DEPOSITS MADE IN THE KOTAK MAHINDRA BANK ACCOUNT ARE NOTHING BUT BUSINESS RECEIPTS OF THE APPELLANT. TOTAL TURNOVER OF BUSINESS OF THE APPELLANT IS WORKED OUT AS UNDER: CASH DEPOSITS IN KOTAK MAHINDRA BANK RS.27,55,000/ - CASH DEPOSITS IN OBC ACCOUNT RS. 5,40,000/ - CHEQUE DEPOSITS IN OBC ACCOUNT RS. 4,50,000/ - TOTAL RS.37,45,000/ - DURING THE ASSESSMENT PROCEEDINGS THE APPELLANT OFFERED TAX @ 8% ON TOTAL TURNOVER OF RS.39,68,000/ - INCLUDING CHEQUE 4 DEPOSITS OF RS.2,23,000/ - IN THE KOTAK MAHINDRA ON ACCOUNT OF TRANSFER FROM THE OBC ACCOUNT. IN VIEW OF THE ABOVE, BUSINESS PROFIT OF THE APPELLANT IS COMPUTED AT RS.3,17,440/ - @8% OF TOTAL TURNOVER OF RS.39,68,000/ - U/S 44AD OF THE ACT. THE AO IS DIRECTED TO ASSESS THE BUSINESS INCOME AT RS.3,17,440/ - INSTEAD OF RS.2,59,500/ - DECLARED BY THE APPELLANT. ADDITION OF RS.27,55,000/ - MADE BY TH E AO IS DELETED. GROUND NOS. 1 TO 3 ARE DECIDED IN ACCORDANCE WITH THE AFOREMENTIONED DIRECTIONS. 4.1 FROM THE ABOVE P ARA FROM THE ORDER OF CIT(A), WE FIND THAT THE ASSESSEE HAS SUBMITTED DETAILED SUBMISSION EXPLAINING THE DEBIT AND CREDIT ENTRIES IN BOTH THE BANK ACCOUNTS AT KOTAK MAHINDRA BANK AND THE ORIENTAL BANK OF COMMERCE AND THE AO DID NOT RELY ON ANY MATERIAL EVIDENCE TO HOLD THAT THE DEPOSITS MADE IN THE KOTAK MAHINDRA ACCOUNT WERE UNEXPLAINED OR UNDISCLOSED INCOME OF THE ASSESSEE. THIS FIND ING OF CIT(A) COULD NOT BE CONTROVERTED BY LEARNED D.R. OF THE REVENUE. WE ALSO FIND THAT CIT(A) HAS ALSO CONSIDERED FORM - 26AS AS PER WHICH THE DEPOSIT IN BANK ACCOUNT ARE IN RESPECT OF BUSINESS TRANSACTIONS ON WHICH TDS WAS DEDUCTED BY THE PAYERS U/S 194 C OF THE ACT. SINCE THE FINDING S OF CIT(A) ARE CATEGORICAL FINDING AND SAME COULD NOT BE CONTROVERTED BY LEARNED D.R. OF THE REVENUE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A). 5. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISS ED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 23 /07/2015 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR