SHRI SATYA NARAYAN AGIWAL, BIJAYNAGAR V. INCOME TAX OFFICE, WARD-1, BEAWAR

ITA 1076/JPR/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9801 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 14-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POONAM ROY DCIT
• Keywords: Set aside
• Section: 69; 44AD; 69A; 264; 192

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH FOT; IKY JKO] U;KF;D LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JUDICIAL MEMBER VK;DJ VIHY LA -@ ITA NO. 1076/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2015-16 SHRI SATYA NARAYAN AGIWAL, PROP.- M/S BANKAT LAL BHAG CHAND, MAHAVEER BAZAR, BIJAYNAGAR. C UKE VS. I.T.O., WARD-1, BEAWAR. LFKK;H YS[KK LA -@THVKBZVKJ LA -@ PAN/GIR NO.: ADSPA 8357 M VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKS J LS @ ASSESSEE BY: SHRI MANISH AGARWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : SMT. POONAM ROY (DCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 23/09/2019 MN?KKS 'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 26/09/2019 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 12/07/2018 OF LD. CIT(A), AJMER FOR THE A.Y. 2015-16. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID.AO HAS ACTED BEYOND JURISDICTION IN MAKING ADDITION OF RS.5,15,091/- BEING CASH IN HAND AS ON 31.03.2015, WHEN AS PER NOTICE ISSUED UNDER CASS. THE ONLY ISSUE FOR SELECTION IN SCRUTINY WAS SPECIFICALLY TO VERIFY - WHETHER THE CASH DEPOSITS HAS BEEN MADE FROM DISCLOSED SOURCES', ON WHICH NO ADDITION WAS MADE. IT ITA 1076/JP/2018 SHRI SATYA NARAYAN AGIWAL VS ITO 2 IS THUS SUBMITTED THAT MAKING ADDITIONS ON THE ISSUE OTHER THAN RECORDED FOR LIMITED SCRUTINY WITHOUT FOLLOWING THE PROCEDURE FOR CONVERSION OF LIMITED SCRUTINY TO THE FULLY COMPLETE SCRUTINY AS PRESCRIBED BY CBDT IS BAD IN LAW AND THUS THE CONSEQUENT ADDITION SO MADE DESERVES TO BE DELETED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID.A0 HAS GROSSLY ERRED IN MAKING ADDITION OF RS.5,15,091/- ON THE ALLEGATION THAT ASSESSEE COULD NOT PRODUCE BOOKS OF ACCOUNTS BY IGNORING THE FACT THAT ASSESSEE HAD FURNISHED RETURN OF INCOME IN ACCORDANCE WITH PROVISIONS OF SECTION 44AD AND THUS WAS NOT REQUIRED TO MAINTAIN BOOKS OF ACCOUNTS AND HAS SUBMITTED RELEVANT DETAILS TO SUBSTANTIATE THE TURNOVER, IT IS THEREFORE PRAYED ADDITION SO MADE DESERVES TO BE DELETED. 3. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE U. CIT(A) HAS ERRED BOTH IN LAW AND IN FACTS IN CONFIRMING ADDITION OF RS.5,15,091/- MADE BY ID. AO U/S 69 ON PROTECTIVE BASIS FOR THE YEAR UNDER APPEAL. WITHOUT THERE BEING ANY ASSESSMENT ORDER MAKING SUBSTANTIVE ADDITIONS, WHICH, AS PER SETTLED LAW, SHOULD PRECEDES PROTECTIVE ASSESSMENT/ADDITIONS. THUS, ASSESSMENT ORDER PASSED BY ID. A0 IS NOT IN ACCORDANCE WITH LAW AND DESERVES TO BE QUASHED AND CONSEQUENT ADDITION DESERVES TO BE DELETED. 4. THAT THE ID. AO HAS FURTHER ERRED IN OBSERVING THAT THE SUBSTANTIVE ADDITION IS TO BE MADE IN AY 2017-18 BY IGNORING THE FACT THAT THE CASH BALANCE WAS OF THE YEAR UNDER APPEAL AND THERE IS NO PROVISION UNDER THE INCOME TAX ACT PERMITTING FOR ASSESSING THE INCOME OF A YEAR TO OTHER ASSESSMENT YEAR. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD.CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE ADDITION OF CASH IN HAND OF RS.5,15,091/- U/S 69A OF INCOME TAX ACT, 1961 BY COMPLETELY BRUSHING ASIDE THE SUBMISSION MADE AND EVIDENCES ADDUCED BY ASSESSEE. 5.1 THAT. THE ID. CIT(A) HAS FURTHER ERRED IN CONFIRMING ADDITION OF RS.5,15,091/- BEING CASH IN HAND AS ON 31.03.2015 BY ALLEGING THAT SUCH CASH IN HAND HAS BEEN SHOWN TO EXPLAIN SOURCE OF ITA 1076/JP/2018 SHRI SATYA NARAYAN AGIWAL VS ITO 3 CASH DEPOSITS MADE DURING DEMONETIZATION. APPELLANT PRAYS THAT SUCH ALLEGATION OF LD.AO IS COMPLETELY BASELESS AND DESERVES TO BE EXCLUDED AND CONSEQUENT ADDITION DESERVES TO BE DELETED. 6. THAT THE APPELLANT CRAVES THE RIGHT TO ADD, DELETE, AMEND OR ABANDON ANY OF THE GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF BEARING OF APPEAL. 2. AT THE TIME OF HEARING, THE LD AR OF THE ASSESSEE HAS STATED AT BAR THAT THE ASSESSEE DOES NOT WANT TO PRESS GROUND NO. 1 OF THE APPEAL AND THE SAME MAY BE DISMISSED AS NOT PRESSED. THE LD DR HAS RAISED NO OBJECTION IF GROUND NO. 1 OF THE ASSESSEES APPEAL IS DISMISSED AS NOT PRESSED. ACCORDINGLY, GROUND NO. 1 OF THE ASSESSEES APPEAL IS DISMISSED BEING NOT PRESSED. 3. GROUNDS NO. 2 TO 5 OF THE APPEAL ARE REGARDING THE ADDITION OF RS. 5,15,091/- MADE U/S 69 OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT) ON PROTECTIVE BASIS ON ACCOUNT OF CASH DEPOSIT IN THE BANK ACCOUNT. THE ASSESSEE IS AN INDIVIDUAL AND PROPRIETOR OF M/S BANKAT LAL BHAG CHAND, ENGAGED IN THE WHOLESALE AS WELL AS RETAIL TRADING OF HARDWARE AND OTHER ITEMS. THE ASSESSEE FILED HIS RETURN OF INCOME ON 04/3/2017 DECLARING TOTAL INCOME OF RS. 2,62,340/- U/S 44AD OF THE ACT. IN THE SCRUTINY ASSESSMENT, THE A.O. NOTED THAT THE ASSESSEE HAS OFFERED INCOME U/S 44AD OF THE ACT WITHOUT PRODUCING ANY EVIDENCE IN SUPPORT OF SUCH ITA 1076/JP/2018 SHRI SATYA NARAYAN AGIWAL VS ITO 4 INCOME AND SUBSTANTIATE THE CLAIM OF INCOME FOR THE YEAR UNDER CONSIDERATION. THE A.O. FURTHER NOTED THAT THE ASSESSEE HAS MADE A CASH DEPOSIT OF RS. 14,50,000/- IN OLD NOTES IN HIS BANK ACCOUNT BETWEEN 09/11/2016 TO 31/12/2016. THE A.O. FOUND THAT THE ASSESSEE HAS TRIED TO SHOW THE DEPOSIT OF CASH IN THE SUBSEQUENT YEAR IS OUT OF THE CASH BALANCE AVAILABLE WITH THE ASSESSEE AND THEREFORE, RETURN OF INCOME WAS FILED U/S 44AD OF THE ACT. ACCORDINGLY, THE A.O. WAS OF THE VIEW THAT THE ENTIRE AMOUNT DEPOSITED IN THE BANK ACCOUNT WOULD BE SUBJECT MATTER OF ASSESSMENT ON SUBSTANTIVE BASIS FOR THE A.Y. 2016-17. HOWEVER, TO PROTECT THE INTEREST OF REVENUE, PROTECTIVE ADDITION/ASSESSMENT OF RS. 5,15,091/- WAS MADE FOR THE YEAR UNDER CONSIDERATION. THE ASSESSEE CHALLENGED THE ACTION OF THE A.O. BEFORE THE LD. CIT(A) BUT COULD NOT SUCCEED. 4. BEFORE THE TRIBUNAL, THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS DECLARED A PROFIT OF RS. 3,93,393/- ON THE TOTAL TURNOVER OF RS. 40,12,543/-. AS PER PROVISIONS OF SECTION 44AD BEING 8% OF THE TURNOVER, THE ASSESSEE IS NOT REQUIRED TO MAINTAIN BOOKS OF ACCOUNT ONCE THE CASE OF THE ASSESSEE FALLS U/S 44AD OF THE ACT. HE HAS FURTHER CONTENDED THAT THE ASSESSEE MAINTAINED PROPER RECORDS OF TURNOVER AS WELL AS CLOSING STOCK. THE TURNOVER REPORTED IN VAT RETURN ESTABLISHED ITA 1076/JP/2018 SHRI SATYA NARAYAN AGIWAL VS ITO 5 THAT FACT OF BUSINESS CARRIED OUT BY THE ASSESSEE. THE LD AR HAS SUBMITTED THAT THE ASSESSEE FILED DETAILS OF FILING VAT SHOWING THE TURNOVER FOR THE YEAR UNDER CONSIDERATION AND THE SAID RETURN WAS FILED WITHIN TIME. HOWEVER, THE A.O. HAS NOT CONSIDERED AND APPRECIATED THE MATERIAL FILED BY THE ASSESSEE. IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS SURINDER PAL ANAND 192 TAXMANN 264 AND SUBMITTED THAT ONCE THE RETURN OF INCOME IS FILED U/S 44AD OF THE ACT, THE TURNOVER DECLARED BY THE ASSESSEE CANNOT BE DOUBTED. THE ASSESSEE IS NOT REQUIRED TO EXPLAIN EACH AND EVERY ENTRY IN SUCH A CASE. HE HAS ALSO RELIED UPON THE FOLLOWING DECISIONS: (I) ITAT DELHI BENCH IN THE CASE OF ITO VS M/S FUSSY FINANCIAL SERVICES PVT. LTD., ITA NO. 4227/DEL/2014 ORDER DATED 05/06/2017. (II) ITAT DELHI BENCH IN THE CASE OF G.K. CONSULTANTS LIMITED VS ITO, ITA NO. 1502/DEL/2013 ORDER DATED 27/06/2014. 5. ON THE OTHER HAND, THE LD DR HAS SUBMITTED THAT IT IS CLEAR FROM THE FACTS THAT TO COVER UP THE CASH DEPOSIT IN THE BANK ACCOUNT OF THE ASSESSEE FROM 09/11/2016 TO 31/12/2016 IN OLD NOTES, THE ASSESSEE HAS FILED BELATED RETURN FOR THE YEAR UNDER CONSIDERATION SHOWING THE CASH ITA 1076/JP/2018 SHRI SATYA NARAYAN AGIWAL VS ITO 6 BALANCE OF RS. 5,15,091/-. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 6. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE THAT THE ASSESSEE HAS DEPOSITED A CASH OF RS. 13,59,490/- ON VARIOUS DATES BETWEEN 09/11/2016 TO 31/12/2016 IN OLD NOTES AFTER DEMONETIZATION. THE ASSESSEE HAS FILED RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 04/3/2017 WHICH CLEARLY SHOWS THAT THE RETURN OF INCOME IS FILED BELATEDLY AND AFTER THE SAID INCIDENT OF DEPOSIT OF OLD NOTES IN THE BANK ACCOUNT OF THE ASSESSEE POST DEMONETIZATION, THE RETURN WAS DECLARED BY THE ASSESSEE U/S 44AD OF THE ACT AND THEREFORE, NO BOOKS OF ACCOUNT OR OTHER RECORD WAS PRODUCED BY THE ASSESSEE IN SUPPORT OF THE SAID CLAIM OF INCOME AS WELL AS AVAILABILITY OF THE CASH WITH THE ASSESSEE. THE A.O. HAS MADE A PROTECTIVE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION IN VIEW OF THE FACT THAT SUBSTANTIVE ADDITION WOULD BE CONSIDERED FOR THE SUBSEQUENT ASSESSMENT YEAR WHEN THE AMOUNT WAS DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE. SINCE IT IS A PROTECTIVE ASSESSMENT MADE BY THE A.O. PRIOR TO THE SUBSTANTIVE ASSESSMENT IN THE SUBSEQUENT YEAR, THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE MATTER IS REQUIRED TO BE RECONSIDERED BY THE A.O. IN THE LIGHT OF THE ASSESSMENT FOR THE A.Y. 2016-17. ITA 1076/JP/2018 SHRI SATYA NARAYAN AGIWAL VS ITO 7 ACCORDINGLY, THIS MATTER IS SET ASIDE TO THE RECORD OF THE A.O. TO RECONSIDER THE SAME AFRESH IN THE LIGHT OF THE ASSESSMENT ORDER PASSED FOR THE A.Y. 2016-17. NEEDLESS TO SAY, THE ASSESSEE BE GIVEN REASONABLE OPPORTUNITY OF HEARING. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH SEPTEMBER, 2019 SD/- FOT; IKY JKO (VIJAY PAL RAO) U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 26 TH SEPTEMBER, 2019 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI SATYA NARAYAN AGIWAL, BIJAYNAGAR. 2. IZR;FKHZ @ THE RESPONDENT- THE I.T.O., WARD-1, BEAWAR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 1076/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR