Shri Moh. Ummer Usmanbhai Mandalwala, Ahmedabad V. The Pr. CIT-1, Ahmedabad

ITA 1036/AHD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9212 (ITAT-AHMEDABAD)
• Duration Of Justice: 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 10-03-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 23-04-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIBHA BHALLA
• Assessee Lawyers: N C AMIN
• Keywords: Business income; Prejudicial to interest
• Section: 44AD; 263

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI S.S. GODARA JUDICIAL MEMBER ./ ITA NO.1036/AHD/2015 / A.Y. 2010-11 SHRI MOH. UMMER USMANBHAI MANDALWAL, C/O. MEWAR TEXTILE, OPP. NEW CATTLE MARKET, NAVA DHOR BHAZAR, CHHIPA KUWA, DANILIMDA, AHMEDABAD PAN : AHFPM 0243 F VS THE PRINCIPAL COMMISSIONER OF INCOME TAX-1, AHMEDABAD / (APPELLANT) / (RESPONDENT) BY APPELLANT : SHRI N.C. AMIN, AR BY RESPONDENT : SMT VIBHA BHALLA, CIT-DR / DATE OF HEARING : 10/03/2016 /DATE OF PRONOUNCEMENT: 17/03/2016 / O R D E R PER S.S. GODARA, JUDICIAL MEMBER THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2010-11 , ARISES FROM ORDER OF PRINCIPAL CIT-I, AHMEDABAD DATED 25.03.201 5, PASSED IN PROCEEDINGS U/S 263 OF THE INCOME-TAX ACT, 1961, IN SHORT THE ACT. 2. WE COME TO THE RELEVANT FACTS FIRST. THIS ASSES SEE - AN INDIVIDUAL DRAWS REMUNERATION FROM HIS FIRM AND CAR RIES OUT JOB WORKS. HE FILED RETURN ON 28.09.2010 DECLARING TOT AL INCOME OF RS.52,280/-. THE SAME WAS PROCESSED. THE ASSESSIN G OFFICER TOOK UP SCRUTINY AND FRAMED REGULAR ASSESSMENT ON 18.10.201 2 MAKING ITA NO. 1036/AHD/2015 SHRI MOH. UMMER USMANBHAI MANDALWALA VS. PR. CIT A.Y. 2010-11 - 2 - ADDITION OF RS.2,02,212/- IN RESPECT OF JOB WORKS. IT EMERGES FROM THE CASE FILE THAT THE ASSESSING OFFICER HAD RECEIVED A IR INFORMATION ON ACCOUNT OF CASH DEPOSITED EXCEEDING RS.10,00,000/- IN ASSESSEES BANK ACCOUNT. THE SAME WAS ATTRIBUTED TO HAVE BEEN DERI VED FROM SMALL SCALE BUSINESSES. THE ASSESSEE HAD TOTAL SALES OF R S.25,63,400/-. HE OFFERED ABOVE STATED SUM OF RS.2,02,152/- ON PRESUM PTIVE BASIS U/S 44AD OF THE ACT. THIS REGULAR ASSESSMENT ACCORDING LY ATTAINED FINALITY. 3. IT IS EVIDENT FROM THE CASE FILE THAT THE CIT FO RMED AN OPINION ON REASONS TO BELIEVE THAT THE ABOVE STATED REGULAR ASSESSMENT WAS ERRONEOUS CAUSING PREJUDICE TO THE INTEREST OF THE REVENUE. HE SOUGHT TO REVISE THE SAME BY ASSUMING SECTION 263 J URISDICTION FOR THE FOLLOWING REASONS.... I) IT IS SEEN THAT THE ASSESSEE HAS SHOWN THE PROFIT U /S 44AD @ 8% ON GROSS RECEIPT OF RS.25,63,410/- AND DO NOT MA INTAINED BOOKS OF ACCOUNTS. SINCE THE ASSESSEE IS ENGAGED I N THE BUSINESS OF DYING OF FABRICS/TEXTILE CLOTHS, HE IS REQUIRED TO MAINTAIN BOOKS OF ACCOUNT U/S 44AA OF THE ACT. II) IT APPEARS THAT THE AO HAS COMPLETED THE ASSESSMENT WITHOUT PROPERLY EXAMINING THE APPLICABILITY OF SEC TION 44AD OF THE ACT. 4. THE ASSESSEE FILED HIS REPLY ON 25.03.2015 IN DETAI L SUPPORTING THE ASSESSING OFFICERS ACTION IN FRAMING REGULAR A SSESSMENT HEREINABOVE THEREBY ASSESSING HIM UNDER PRESUMPTIVE TAX RATE AFTER MAKING ALL INQUIRIES. THE CITS ORDER UNDER CHALLE NGE REJECTS THE SAME MAINLY ON THE GROUND THAT THIS PRESUMPTIVE TAX RATE U/S 44AD DOES NOT APPLY AS THE ASSESSEE DOES NOT CARRY ELIGI BLE BUSINESS OF CIVIL ITA NO. 1036/AHD/2015 SHRI MOH. UMMER USMANBHAI MANDALWALA VS. PR. CIT A.Y. 2010-11 - 3 - CONSTRUCTION, LABOUR SUPPLY ETC. IN THE IMPUGNED A SSESSMENT YEAR. HE TAKES NOTICE OF THE FACT THAT IT IS FROM ASSESSM ENT YEAR 2011-12 ONLY THAT ASSESSEES CASE COULD BE HELD TO BE COVERED AN D NOT THE IMPUGNED ASSESSMENT YEAR. THE CIT OBSERVES THAT AS SESSEE OUGHT TO HAVE MAINTAINED HIS BOOKS OF ACCOUNT U/S 44AA BEING NOT COVERED BY PRESUMPTIVE TAX PROVISION HEREINABOVE. HE ACCOR DINGLY DIRECTS THE ASSESSING OFFICER TO FRAME A FRESH ASSESSMENT. THIS LEAVES THE ASSESSEE AGGRIEVED. 5. WE HAVE HEARD BOTH THE PARTIES. CASE FILE PERUSED. LD. AUTHORIZED REPRESENTATIVE SUBMITS THAT THE ASSESSIN G OFFICER HAD RIGHTLY FRAMED ASSESSMENT BY ASSESSING AT PRESUMPTI VE RATE U/S 44AD OF THE ACT. WE DREW HIS ATTENTION TO THIS STA TUTORY PROVISION TO BE APPLICABLE IN HIS CASE ONLY FROM 01.04.2011 RELE VANT TO THE ASSESSMENT YEAR 2011-12 AND NOT IN THE IMPUGNED ASS ESSMENT YEAR. LD. COUNSEL ACCEPTS THIS ERROR. HIS NEXT PLEA IS T HAT THE ASSESSING AUTHORITY ASSESSED HIM AT PRESUMPTIVE RATE OF 8% CO MING TO BE HIGHER THAN THAT PRESCRIBED @ 5% U/S 44AF OF THE AC T APPLICABLE FOR COMPUTING PROFITS AND GAINS OF RETAIL BUSINESS. NO PREJUDICE TO THE INTEREST OF THE REVENUE IS STATED TO BE CAUSED IN T HESE CIRCUMSTANCES. IT EMERGES THAT ASSESSEE IS ENGAGED IN JOBWORKS ONL Y AND NOT IN ELIGIBLE RETAIL TRADE IN ANY GOODS OR MERCHANDISE. LD. COUNSEL AT THIS STAGE SUBMITS THAT ALTHOUGH HIS CASE IS NOT COVERED BY AMENDED SECTION 44AD OF THE ACT, HOWEVER, THE BENCH CAN STI LL GUIDED BY THIS PROVISION TO HOLD ASSESSEES PRESUMPTIVE ASSESSMENT @ 8% (SUPRA) AS BE JUST AND PROPER. WE FIND THIS PLEA TO BE ENTIRE LY MISCONCEIVED. WE REPEAT THAT ONCE THE LEGISLATURE HAS ITSELF MADE AMENDED SECTION ITA NO. 1036/AHD/2015 SHRI MOH. UMMER USMANBHAI MANDALWALA VS. PR. CIT A.Y. 2010-11 - 4 - 44AD TO BE APPLICABLE W.E.F. 01.04.2011 IN CASE OF ELIGIBLE ASSESSEES AND BUSINESSES BOTH, THE SAME CANNOT BE STRETCHED B ACK TO APPLY FROM AY 2010-11 IN QUESTION . WE HOLD IN THESE PECULIAR FACTS AND CIRCUMSTANCES THAT ASSESSING OFFICERS ACTION IN AS SESSING THE ASSESSEE AT PRESUMPTIVE RATE OF TAX U/S 44AD IS ERR ONEOUS AS WELL AS PREJUDICIAL TO INTEREST OF THE REVENUE. THE CITS ORDER UNDER CHALLENGE IS AFFIRMED ACCORDINGLY. 6. THIS ASSESSEES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON THIS DAY, THE 17 TH MARCH, 2016 AT AHMEDABAD SD/- SD/- (PRAMOD KUMAR) (S .S. GODARA) ACCOUNTANT MEMBER JU DICIAL MEMBER AHMEDABAD, DATED 17/03/2016 *BT !'#$%&%'# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT. 3. #$#% ' ' & / CONCERNED CIT 4. ' ' & ( ) / THE CIT(A) 5. )*+' % , ' ' % , $ / DR, ITAT, AHMEDABAD 6. +/ 0 / GUARD FILE. TRUE COPY / BY ORDER, TRUE COPY / (DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD