ITO, Pune V. Raut Dilip Mahadev, Pune

ITA 1072/PUN/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56593 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 19-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S N DOSHI
• Assessee Lawyers: ANN KAPTHUAMA
• Keywords: Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO. 1072/PN/2010 (ASSTT. YEAR: 2006-07) INCOME TAX OFFICER APPELLANT WARD 9(3) PRATYAKSHA KAR BHAVAN, DR.AMBEDKAR ROAD, NEAR AKURDI RLY. STATION, AKURDI, PUNE 411044 V. RAUT DILIP MAHADEV , ... RESPONDENT PROP. PRAVIN TRANSPORT AND SAND SUPPLIERS, S.NO.34, AT MAMURDI, DEHUROAD PAN: AAYPR4824R APPELLANT BY : MS. ANN KAPTHUAMA (D.R) DEPARTMENT BY : SHRI S.N. DOSHI DATE OF HEARING : 23.11.11 DATE OF PRONOUNCEMENT: .11.11 ORDER PER I.C. SUDHIR, JM THE REVENUE HAS QUESTIONED FIRST APPELLATE ORDER R AISING AN ISSUE AS TO WHETHER THE LD CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 19,16,945/- (CORRECT FIGURE APPEARS TO BE RS.22,18,544/-) MADE ON ACCOUNT OF UNDISCLOSED RECEIPT AND IN ALLOWING THE ASSESSEE BENEFIT OF EXP ENDITURE AGAINST THE UNDISCLOSED RECEIPTS WHEN THE A.O HAS ALLOWED ALL THE EXPENSES INCURRED BY THE ASSESSEE AGAINST THE DISCLOSED RECEIPT ITSELF. 2. THE RELEVANT FACTS EMERGING FROM THE ORDERS OF T HE AUTHORITIES BELOW ARE THAT THE REVENUE RECEIVED INFORMATION THROUGH AIR THAT T HE ASSESSEE HAD RECEIVED FREIGHT CHARGES AMOUNTING TO RS. 25,29,936/- FROM 3 PARTIES DURING THE RELEVANT PREVIOUS YEAR. IT WAS FURTHER OBSERVED BY THE A.O THAT FROM TDS RECEIPTS, THE ITA . NO. 1072 /PN/2010 RAUT DILIP MAHADEV A.Y. 2006-07 PAGE OF 4 2 ASSESSEE HAD ALSO RECEIVED FREIGHT CHARGES TO THE T UNE OF RS.29,77,812/- FROM 5 OTHER PARTIES DURING THE PREVIOUS YEAR. AGAINST THE RECEIPT OF THESE TOTAL FREIGHT CHARGES OF RS. 55,07,818/-, THE ASSESSEE HAD DECLA RED RECEIPT AMOUNTING TO RS.35,90,873/- ONLY IN ITS TRADING ACCOUNT. BASED ON THESE FACTS, THE A.O ISSUED SHOW CAUSE NOTICE TO ASSESSEE SEEKING HIS EXPLANATI ON REGARDING THE DISCREPANCY OF RS.19,16,945/- I.E. DIFFERENCE BETWEEN THE TOTAL RE CEIPT AS PER AIR INFORMATION AND TDS RECEIPTS ON THE ONE HAND AND THE RECEIPTS ACTUA LLY DISCLOSED IN THE ASSESSEES STATEMENT OF ACCOUNT FILED WITH RETURN OF INCOME ON THE OTHER. SINCE THE ASSESSEE FAILED TO FURNISH ANY SATISFACTORY EXPLANATION, THE A.O ADDED THE ENTIRE AMOUNT OF RS.19,16,945/- AS UNEXPLAINED INCOME IN THE HANDS O F THE ASSESSEE. 3. BEFORE THE LD CIT(A), THE ASSESSEE SUBMITTED THA T THE TOTAL FREIGHT CHARGES RECEIPT DURING THE YEAR WERE TO THE TUNE F RS. 58,0 9,417/- AND NOT RS.55,07,818/- AS COMPUTED BY THE A.O AND THAT THE CORRECT AMOUNT OF UNACCOUNTED FREIGHT RECEIPTS WAS TO THE TUNE OF RS. 22,18,544/- AND NOT RS. 19,1 6,945/- AS MENTIONED IN THE ASSESSMENT ORDER. THE ASSESSEE, HOWEVER, CONTENDED THAT THE A.O HAS ERRED IN TREATING THE ENTIRE DIFFERENCE OF FREIGHT RECEIPT I .E. 100% OF THE UNDISCLOSED RECEIPT AT PROFIT. HE CONTENDED THAT THE ASSESSEES CASE I S ADMITTEDLY ONE WHERE NO BOOKS OF ACCOUNTS HAVE BEEN MAINTAINED AND IT HAS BEEN TH E ACCEPTED POSITION OVER THE YEARS. THE ASSESSEE HAD DECLARED NET PROFIT ESTIMAT ED AT THE RATE 7.7% OF GROSS RECEIPTS. THE ASSESSEE ACCORDINGLY SUBMITTED THAT ADOPTION OF PROFIT ON THE UNDISCLOSED TURNOVER OF RS. 22,18,544/- AT THE RATE OF 100% IS CONTRARY TO THE REASON AND IS NOT JUSTIFIED. IT WAS REQUESTED THAT PROFITS ON THE SAID AMOUNT OF UNDISCLOSED TURNOVER MAY ALSO BE ESTIMATED AT 7.7% ONLY. IN THIS REGARD, RELIANCE WAS PLACED ON THE DECISION OF PUNE BENCH OF THE TRI BUNAL IN THE CASE OF ITO VS. DEORE SANTOSH BHIMRAO, ITA NOS. 1100 AND 1101/PN/20 07 (A.YS. 2004-05 AND 2003-04), ORDER DATED 24 TH MARCH 2009, A COPY WHEREOF HAS BEEN SUPPLIED BY TH E LD. A.R. BEFORE THE TRIBUNAL. FOLLOWING THE SAID D ECISION, THE LD CIT(A) HAS HELD THAT ONLY 7.7% OF THE UNDISCLOSED TURNOVER AMOUNTIN G TO RS. 22,18,544/-( AND NOT ITA . NO. 1072 /PN/2010 RAUT DILIP MAHADEV A.Y. 2006-07 PAGE OF 4 3 RS. 19,16,945/-) MAY BE ADDED TO THE INCOME OF THE ASSESSEE FOR THE RELEVANT PREVIOUS YEAR AND NOT THE ENTIRE GROSS UNDISCLOSED TURNOVER. 4. IN SUPPORT OF THE GROUND, THE LD. D.R. HAS BASIC ALLY PLACED RELIANCE ON THE ASSESSMENT ORDER. SHE HAS SUBMITTED FURTHER THAT LD CIT(A) WAS NOT JUSTIFIED IN NOT APPLYING THE RATIO OF DECISION IN THE CASE OF G OETZ INDIA LTD, 284 ITR 323 (SC) BEFORE ALLOWING THE EXPENSES AGAINST THE UNDISCLOS ED RECEIPTS WHEN THE A.O HAD ALLOWED ALL THE EXPENSES INCURRED BY THE ASSESSEE A GAINST THE DISCLOSED RECEIPTS ITSELF AND NO NEW EXPENSES HAVE BEEN CLAIMED BY THE ASSESSEE BY WAY OF REVISED RETURN. 5. THE LD. A.R., ON THE OTHER HAND, TRIED TO JUSTIF Y THE FIRST APPELLATE ORDER ON THE ISSUE. HE SUBMITTED THAT THE REVENUE IN THE GR OUND NO. 1 OF ITS APPEAL ITSELF HAS ADMITTED THAT THE A.O HAD ALLOWED ALL THE EXPENSES INCURRED AGAINST THE DISCLOSED RECEIPTS ITSELF. THEREFORE, THERE IS NO DENIAL OF F ACT THAT EXPENDITURE INCURRED ON THE UNDISCLOSED RECEIPTS HAVE NOT BEEN ALLOWED. HENCE, THE LD CIT(A) WAS JUSTIFIED IN ALLOWING THE EXPENDITURE AND THE SAME IS IN CONSONA NCE WITH THE VIEW TAKEN BY THE TRIBUNAL IN THE CASE OF ITO VS. DEORE SANTOSH BHIMR AO (SUPRA). 6. CONSIDERING THE ABOVE SUBMISSIONS, WE FIND THAT THE FIRST APPELLATE ORDER AS DISCUSSED ABOVE, BASED UPON THE DECISION OF THE TRI BUNAL IN THE CASE OF ITO VS. DEORE SANTOSH BHIMRAO (SUPRA) IS REASONED ONE. UND ER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) WAS JUSTIF IED IN RESTRICTING THE ADDITION ONLY TO THE EXTENT OF 7.7% OF THE UNDISCLOSED TURNOVER A MOUNTING TO RS. 22,18,544/- INSTEAD OF UPHOLDING THE ACTION OF A.O IN MAKING AD DITION OF THE ENTIRE UNDISCLOSED TURNOVER. IT IS ALSO NOT IN DISPUTE THAT ASSESSEE H AD DECLARED NET PROFIT AT THE RATE OF 7.7% OF THE GROSS RECEIPTS DECLARED. WE THUS DO NO T FIND REASON TO INTERFERE WITH THE FIRST APPELLATE ORDER. THE SAME IS UPHELD. TH E ISSUE IS THUS DECIDED IN FAVOUR OF THE ASSESSEE. THE RELATED GROUNDS ARE ACCORDINGLY REJECTED. ITA . NO. 1072 /PN/2010 RAUT DILIP MAHADEV A.Y. 2006-07 PAGE OF 4 4 7. IN RESULT, APPEAL IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 29 TH NOVEMBER 2011. SD/- SD/- ( D. KARUNAKARA RAO ) ACCOUNTANT MEMBER (I.C. SUDHIR ) JUDICIAL MEMBER PUNE, DATED THE 29TH NOVEMBER, 2011 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT V, PUNE 4. THE CIT(A)- V, PUNE 4. THE D.R. B BENCH, PUNE 5. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE