Sulay R. Vakta, Ahmedabad V. The Income Tax Officer, Ward-10(4), Ahmedabad

ITA 1081/AHD/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6269 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 29-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Assessee Lawyers: S N DIVATIA
• Keywords: Unexplained cash credit; Business income; Income from undisclosed sources; Rectification of order; Principle of natural justice

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER !# I.T.A. NO.1081/AHD/2015 ( / ASSESSMENT YEAR : 2010-11) SULAY R. VAKTA, A-43, TIRTHBHUMI APARTMENTS, LAW GARDEN, ELLISBRIDGE, AHMEDABAD 380 006 # VS. THE ITO, WARD 10(4), NARAYAN CHAMBERS, ASHARAM ROAD, AHMEDABAD. $ # % & # PAN/GIR NO. : ADSPV 0983 G ( !$' / APPELLANT ) .. ( ($' # RESPONDENT ) !$') # APPELLANT BY : SHRI S. N. DIVATIA, A.R. ($'*) / RESPONDENT BY : SHRI V. K. SINGH, SR. D.R. + ,*-. / DATE OF HEARING 03/01/2018 /012*-. / DATE OF PRONOUNCEMENT 18/01/2018 3# O R D E R PER MAHAVIR PRASAD, JUDICIAL MEMBER : THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-5, AHMEDABAD, DATED 20/02/2015 FOR ASSESSMENT YEAR (A.Y.) 2010-11, ON T HE FOLLOWING GROUNDS: 1.1 THE ORDER PASSED U/S.250 ON 20-02-2015 FOR A.Y.2010 -11 BY CIT(A)-5, ABAD UPHOLDING PARTLY THE ADDITIONS/DISAL LOWANCES MADE BY AO IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. ITA NO.1081/AHD /2015 SULAY R. VAKTA VS. ITO A.Y. 2010-11 - 2 - 1.2 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR O N FACTS IN NOT CONSIDERING FULLY AND PROPERLY THE SUBMISSIONS MADE AND EVIDENCE PRODUCED BY THE APPELLANT WITH REGARD TO T HE IMPUGNED ADDITIONS/DISALLOWANCES. 2.1 THE LD.CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND O N FACTS IN CONFIRMING THE FOLLOWING ADDITIONS/DISALLOWANCES: A) REJECTION OF BOOKS AND GP ADDITION (THIS WAS SET OFF AGAINST OTHER ADDITIONS) B) UNEXPLAINED CASH CREDIT IN CAPITAL A/C RS. 13,1 0,300/- C) DISALLOWANCE OF DEDUCTION U/S.80GGC RS. 10,7 0,000/- D) UNACCOUNTED JOB WORK RECEIPTS RS. 2,63,9 09/- 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD.CIT(A) OUGHT NOT TO HAVE UPHELD THE ABOVE S AID ADDITIONS/DISALLOWANCES. 3.1 THE LD.CIT(A) HAS ERRED IN LAW AND OR ON FACTS IN UPHOLDING THE REJECTION OF BOOK RESULT MERELY FOR THE REASON OF N O GP AND WITHOUT POINTING OUT ANY DEFECT OR DEFICIENCIES. 3.2 THE LD. CIT(A) HAS ERRED IN LAW AND OR ON FACTS IN HOLDING THAT THE CONTRIBUTION TO POLITICAL PARTY OF RS. 10,70,000/- WAS MADE OUT OF UNACCOUNTED SOURCE, THOUGH IT WAS DULY RECORDED IN AUDITED BOOKS. IT IS, THEREFORE, PRAYED THAT THE ADDITIONS/DISALL OWANCES UPHELD BY THE CIT(A) MAY KINDLY BE DELETED. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- THE APPELLANT IS AN INDIVIDUAL AND ENGAGED IN TRADI NG OF PAPER PRODUCTS. HE HAD FILED HIS RETURN OF INCOME FOR A. Y. 2010-11 ON 14-10- 2010 DECLARING TOTAL INCOME OF RS.2,10,610/-. 2.1 DURING THE COURSE OF ASSTT. PROCEEDINGS, THE AO NOTICED THAT THE APPELLANT HAD DISCLOSED GP@ 0.85% ON TOTAL SALES OF RS.2.78 CR. AS AGAINST GP OF 2.95% ON TOTAL SALES OF RS. 1.22 CR. IN THE EARLIER YEAR. IT ITA NO.1081/AHD /2015 SULAY R. VAKTA VS. ITO A.Y. 2010-11 - 3 - WAS ALSO FOUND THAT THE APPELLANT HAD MADE MOST OF THE PURCHASES FROM 3 DIFFERENT PARTIES OUT OF WHICH 2 WERE ASSOCIATE CON CERNS. 2.2 THEREAFTER, THE AO ISSUED SHOW CAUSE NOTICE ON 08/02/2013 FIXING THE HEARING ON 15/02/2013 FOR MAKING ADDITION ON AC COUNT OF ESTIMATING GP @ 2.95%. THE APPELLANT COULD NOT FURNISH REPLY T O THE SAME AND THE AO MADE GP ADDITION OF RS.26,39,085/-. THEREAFTER, THE AO PASSED RECTIFICATION ORDER U/S.154 WHEREBY THE GP ADDITION WAS CORRECTED TO RS.5,85,410/- INSTEAD OF RS.58,54,410/-. 2.3 THE AO FURTHER NOTICED THAT THE APPELLANT INTRO DUCED FRESH CAPITAL OF RS.13,10,300/- IN CASH OUT OF THE SALE PROCEEDS GOLD ORNAMENTS TO M/S. AAMITESH TRADING CO. THE AO MADE ADDITION ON ACCOUN T OF FAILURE TO FURNISH EXPLANATION. 2.4 THE APPELLANT HAD CLAIMED DEDUCTION U/S.80GGC O F RS.10,70,000/- IN RESPECT OF DONATION TO THE POLITICAL PARTY-LOK J AN SHAKTI PARTY. THOUGH THE NOTICE U/S.133(6) DATED 01/01/2013 WAS SERVED T HROUGH INSPECTOR AT THE OFFICE OF SAID POLITICAL PARTY. 2.5 THE AO NOTICED THAT THERE WAS A DIFFERENCE OF RS.26 ,39,085/- BETWEEN THE CONTRACT RECEIPTS AS PER BOOKS AND I.T. RECORD. IN VIEW OF NO EXPLANATION FROM THE APPELLANT, THE SAID DIFFERENCE WAS TREATED AS UNACCOUNTED INCOME. ITA NO.1081/AHD /2015 SULAY R. VAKTA VS. ITO A.Y. 2010-11 - 4 - 2.6 BEING AGGRIEVED, THE APPELLANT PREFERRED APPEAL TO CIT(A) WHEREIN FURTHER DETAILS AND EXPLANATION WERE FURNISHED. THE CIT(A) CALLED FOR REMAND REPORT FROM AO. AFTER CONSIDERING THE MATERI AL PRODUCED BY THE APPELLANT AND REMAND REPORT OF AO, THE CIT(A) CONFI RMED THE FOLLOWING ADDITIONS. A) REJECTION OF BOOKS AND GP ADDITION RS. 5,85,410/- (THIS WAS SET OFF AGAINST OTHER ADDITIONS) B) UNEXPLAINED CASH CREDIT IN CAPITAL A/C RS.13,10,300/- C) DISALLOWANCE OF DEDUCTION U/S.80GGC RS .10,70,000/- D) UNACCOUNTED JOB WORK RECEIPTS RS. 2, 63,909/- 2.7 THE CIT(A) HAS CONFIRMED THE REJECTION OF BOOK RESULT FOR THE REASONS STATED IN PARA 4.8 TO 4.10 OF THE ORDER. IT IS FURTHER OBSERVED BY HIM THAT DURING THE COURSE OF APPELLATE PROCEEDINGS , THE APPELLANT SUBMITTED A DIFFERENT CAPITAL ACCOUNT WHEREIN THE A MOUNT IN LINE WITH THE SALE BILLS OF GOLD ORNAMENTS WAS SHOWN. THEREFORE, THIS ADDITION WAS CONFIRMED. AS REGARDS THE DEDUCTION U/S. 80GGC, IT IS OBSERVED BY HIM AT PARA 6.6 AND 6.7 OF THE ORDER THAT THE DETAILS AND EVIDENCE OF THE SOURCE OF THE SAID PAYMENT WAS NOT FURNISHED SO THAT IT WAS A N UNEXPLAINED PAYMENT. THE APPELLANT HAD EXPLAINED THE SAME TO BE DULY RECORDED IN THE AUDITED BOOKS OF ACCOUNTS. AS REGARDS THE ADDITION TOWARDS THE DIFFERENCE IN THE JOB WORK RECEIPTS, THE CIT(A) HAS CONFIRMED THE ADDITION TO THE EXTENT OF GP@2.95% I.E. RS.2,63,909/-. FINALLY, THE ADDITIONS SO CONFIRMED BY HIM WERE TELESCOPED WITH THE UNACCOUNT ED PAYMENT AND CAPITAL CONTRIBUTION. ITA NO.1081/AHD /2015 SULAY R. VAKTA VS. ITO A.Y. 2010-11 - 5 - 3. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMP UGNED ORDER. IN RESPECT OF COMPARATIVE FIGURE OF LAST THREE YEARS O F GROSS PROFIT SHOWN BY THE APPELLANT. IN THIS DETAIL IT WAS NOTICED BY THE LD. CIT(A) THAT APPELLANT HAS SHOWN GROSS PROFIT @0.85% AND SHOWN GROSS PROFI T OF IMMEDIATE PRECEDING ASSESSMENT YEAR @2.95% THEREAFTER, A NOT ICE WAS ISSUED BY THE LD.CIT(A) AND IT WAS STATED THAT APPELLANT HAD MADE MOST OF THE PURCHASE FROM THREE DIFFERENT PARTIES OUT OF WHICH TWO WERE ASSOCIATED CONCERN WHICH WAS THE PRINCIPAL REASON FOR FALL IN GP RATE. RESULT SHOWN BY THE ASSESSEE AS PER BOOKS OF ACCOUNTS WERE NOT A CCEPTED AS ASSESSEE NOT PRODUCED ANY BOOKS OF ACCOUNTS FOR VERIFICATION AFTER GIVING SO MANY OPPORTUNITY BY THE LOWER AUTHORITIES. IN THESE CIRC UMSTANCES, IT IS CLEAR THAT ASSESSEE HAS NOT MAINTAINED THE BOOKS OF ACCOU NTS AND LD. CIT(A) HAS RIGHTLY MADE THE GP @2.95% AND WE ARE NOT INCLI NE TO INTERFERE IN THE ORDER PASSED BY THE LD. CIT(A). 4. SO FAR AS UNEXPLAINED CASH CREDIT IN CAPITAL ACC OUNT IS CONCERNED. DURING THE YEAR OF ASSESSMENT PROCEEDING, THE APPEL LANT SUBMITTED THE SALE BILL COPIES OF THE SALE OF GOLD AND THOSE BILL S WERE DTD. 02.03.2010 AND 03.10.2010 FOR THE SALE PROCEEDS OF RS.6,75,000 /- AND RS.6,35,300/- RESPECTIVELY. SO ON THE ONE HAND THE INTRODUCTION O F THE CAPITAL WAS ON 16.06.2009 AND 24.10.2009 WHILE THE SALE BILLS WERE DTD. 02.03.2010 AND 03.10.2010 RESPECTIVELY SO IT IS APPARENT THAT THE SALE PROCEEDS OF THE SALE OF GOLD WERE SUBSEQUENT TO THE DATE OF CAPITAL INTR ODUCTION. THEREAFTER, THE APPELLANT ISSUED NOTICE U/S.131 TO THE AFORESAI D PARTY. HOWEVER, NO COMPLIANCE OF THE SAME WAS MADE FOR REASON BEST KNO WN TO THE PARTIES. ITA NO.1081/AHD /2015 SULAY R. VAKTA VS. ITO A.Y. 2010-11 - 6 - IN OUR CONSIDERED OPINION, CAPITAL INTRODUCTION WIT HOUT ANY SOURCE AND LOWER AUTHORITIES HAS RIGHTLY CONFIRMED THE ADD ITION. THEREFORE, WE DO NOT WANT TO INTERFERE IN THE ORDER PASSED BY THE LD. CIT(A). THIS GROUND OF APPEAL IS DISMISSED. 5. SO FAR AS DISALLOWANCE OF DEDUCTION U/S.80GGC IS CONCERNED. REGARDING THE SAME, LD. CIT(A) ASKED FOR THE REMAND REPORT FROM AO. THE AO HAS MADE THE ADDITION OF RS.10,70,000/- ON A CCOUNT OF NON- FURNISHING OF THE DETAILS OF THE SOURCES OF THE PAY MENT MADE TOWARDS THE DONATION TO A POLITICAL PARTY NAMELY LOK JANSHAKTI PARTY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE CONFIRMATION F ROM THE POLITICAL PARTY WAS PRODUCED AND THE SAME HAVE BEEN PRODUCED BY THE SAID PARTY DIRECTLY TO THE AO IN COMPLIANCE TO THE NOTICE ISSU ED U/S.133(6) OF THE ACT. SO THERE IS NO DOUBT ABOUT THE GENUINENESS OF THE DONATION MADE TO THE POLITICAL PARTY AS DEDUCTION CLAIMED BY THE APP ELLANT U/S.80GGC OF THE ACT. HOWEVER, IN SPITE OF VARIOUS REQUISITIONS MADE BY THE AO THE APPELLANT HAS FAILED TO PROVIDE THE DETAILS AND EVI DENCES OF THE SOURCE OF THOSE PAYMENTS AND ALSO DID NOT PROVIDE WHETHER THE SE DONATIONS HAVE BEEN RECORDED IN HIS REGULAR BOOKS OF ACCOUNTS OR N OT. IN OUR CONSIDERED OPINION, WE SEND THIS MATTER BACK TO THE FILE OF THE AO WITH THE LIMITED DIRECTION THAT AO WILL CHEC K SOURCE OF PAYMENT OF RS.10,70,000/- AND WHETHER ABOVE SAID DONATION H AVE BEEN RECORDED IN HIS REGULAR BOOKS OF ACCOUNT OR NOT AND THEREAFTER WILL TAKE ACTION AS PER LAW. ITA NO.1081/AHD /2015 SULAY R. VAKTA VS. ITO A.Y. 2010-11 - 7 - 6. SO FAR AS UNACCOUNTED JOB WORK RECEIPTS OF RS.2, 63,909/- IS CONCERNED. SINCE THE APPELLANT HAS DERIVED THE UNAC COUNTED INCOME OF THIS UNACCOUNTED BUSINESS AS DISCUSSED BY THE LD. C IT(A) IN HIS ORDER WITHOUT UTILIZATION OF UNACCOUNTED INCOME IN THE FO RM OF CAPITAL CONTRIBUTION IN THE CAPITAL ACCOUNT. THEREFORE, NO SEPARATE ADDITION UNDER THIS HEAD OF INCOME WAS REQUIRED TO BE MADE AND LD. CIT(A) ALSO HELD THAT IN PRINCIPAL ADDITION TO THE EXTENT OF RS.2,63 ,909/- ON ACCOUNT OF UNRECORDED PROFITS ON THE UNACCOUNTED TURNOVER IS T O BE TAXED BUT NO SEPARATE ADDITION FOR THE SAME IS DIRECTED TO MADE DUE TO TELESCOPING OF THE UNACCOUNTED INCOME TOWARDS THE UTILIZATION OF T HE UNACCOUNTED PAYMENTS AND CAPITAL INTRODUCTION. 7. IN OUR CONSIDERED OPINION, LD. CIT(A) HAS PASSED REASONED AND DETAILED ORDER AND WE DO NOT WANT TO INTERFERE IN T HE ORDER PASSED BY THE LD.CIT(A). 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS P ARTLY ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 18 /01/2018 SD/- SD/- ( ) 4 5 ( N.K. BILLAIYA ) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 18/01/2018 ITA NO.1081/AHD /2015 SULAY R. VAKTA VS. ITO A.Y. 2010-11 - 8 - PRITI YADAV, SR. PS !'#$ %$' # COPY OF THE ORDER FORWARDED TO : 1. !$' / THE APPELLANT 2. ($' / THE RESPONDENT. 3. 67- + 8- / CONCERNED CIT 4. + 8- 4!5 / THE CIT(A)-5, AHMEDABAD. 5. 9:;-67 !.!672 ! / DR, ITAT, AHMEDABAD 6. ;<=, # GUARD FILE. & ' / BY ORDER, (9-- //TRUE COPY// (/' )* ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION 11/01/2018 . 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 16/01/2018 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER