Shri Samir P.Jariwala, Surat V. The Income tax Officer,Ward-5(4), Surat

ITA 1120/AHD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1228 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 22-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Keywords: Business income

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA.NO.1120/AHD/2013 / ASSTT. YEAR: 2009-2010 SAMIR P. JARIWALA 4/4528, 1 ST FLOOR DHAWAL KUNVERJI NI SHERI BEGAMPURA, SURAT 395 003. VS ITO, WARD - 5(4) SURAT. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : PARIN SHAH REVENUE BY : SHRI DINESH SINGH, SR.DR / DATE OF HEARING : 21/06/2016 / DATE OF PRONOUNCEMENT: 13/07/2016 $%/ O R D E R THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAIN ST THE ORDER OF THE LD.CIT(A)-I, SURAT DATED 7.1.2013 PASSED FOR THE AS STT.YEAR 2009-10. 2. THE LD.AO HAS DETERMINED THE TAXABLE INCOME OF T HE ASSESSEE AS UNDER: SR.NO. PARTICULARS OF ADDITION FOR DISALLOWANCE MADE AMOUNT (IN RS.) 1. ADDITION ON ACCOUNT OF UNDISCLOSED TURNOVER OF BUSINESS U/S.69 4,74,084.00 2. UNDISCLOSED SAVINGS BANK INTEREST 260.00 3. UNACCOUNTED FIXED DEPOSITS 2,00,825.00 6,75,169.00 3. IT IS BROUGHT TO MY NOTICE THAT THE ISSUE IN DIS PUTE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE ITAT PAS SED IN THE ASSTT.YEAR 2008-09 (ITA NO.201/AHD/2012). THE ASSESSEE WAS RU NNING BUSINESS OF MANUFACTURING AND TRADING OF JARI-KASAB . IT HAS AN ACCOUNT WITH ICICI BANK ITA NO.1120/AHD/2013 2 LTD. WHICH WAS NOT DISCLOSED TO THE DEPARTMENT. IT REVEALED TO THE REVENUE THAT A SUM OF RS.27,88,729/- WAS DEPOSITED IN THIS ACCOUNT. THE LD.AO HAS ACCEPTED THIS STAND OF THE ASSESSEE THAT THIS ACCOU NT WAS BEING USED BY HIM FOR THE PURPOSE OF BUSINESS, AND THEREFORE, THE ADDITIO N IS TO BE MADE ON THE BASIS OF PEAK INVESTMENTS AS WELL AS PROFIT RESULTED TO T HE ASSESSEE OUT OF THIS UNDISCLOSED SALES. THE LD.AO HAS MADE ADDITION OF RS.4,74,084/-. 4. APPEAL TO THE LD.CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 5. BEFORE ME, IT WAS CONTENDED BY THE LD. COUNSEL F OR THE ASSESSEE THAT IN THE PRECEDING ASSESSMENT YEAR I.E. THE ASSTT.YEAR 2 008-09 ADDITION ON THE BASIS OF AMOUNTS AVAILABLE IN THIS ACCOUNT HAS BEEN MADE. THE TRIBUNAL DID NOT APPROVE THE METHODOLOGY OF WORKING OUT THE ADDI TION AT THE END OF THE AO. THE TRIBUNAL HAS CONFIRMED THE ADDITION AT NET PROFIT RATE OF 4.8% ON THE TOTAL UNDISCLOSED CREDITS DEPOSITED IN THIS ACCOUNT . HE AGREED THAT FOLLOWING THIS ANALOGY, AN ADDITION AT A FIXED NET PROFIT RAT E ON THE TOTAL DEPOSIT OF RS.27,88,729/- IS TO BE MADE. HE POINTED OUT THAT IN THE LAST YEAR, THE TRIBUNAL HAS ADOPTED THE RATE OF 4.8%, BUT IN THIS YEAR ON THE REGULAR TRADING ACCOUNT THE ASSESSEE HIMSELF HAS SHOWN 7.54%. THER EFORE, THE PROFIT OUGHT TO BE COMPUTED AT THIS RATE. 6. ON THE OTHER HAND, THE LD.DR CONTENDED THAT IT I S THE NORMAL RATE OF PROFIT ON THE REGULAR TRANSACTION. FOR AN UNDISCLO SED ACCOUNT, THERE SHOULD BE A LITTLE HIGHER RATE. 7. I HAVE CONSIDERED RIVAL SUBMISSIONS CAREFULLY. T O MY MIND, IF A NET PROFIT RATE AT 4.8% CAN BE JUSTIFIABLE IN THE IMMED IATELY PRECEDING YEAR, THEN A LITTLE HIGHER RATE AT 7.54% IS FAR BETTER. IT IS PERTINENT TO MENTION THAT ACCOUNT WAS NOT DISCLOSED TO THE DEPARTMENT. IT HAS BEEN A CCEPTED AS FACT BY THE AO ITA NO.1120/AHD/2013 3 AS WELL AS BY THE ASSESSEE THAT IT WAS USED FOR THE PURPOSE OF BUSINESS. SALE PROCEEDS OUT OF THE BUSINESS HAVE BEEN DEPOSITED IN THIS ACCOUNT. THEREFORE, THE TOTAL CREDIT IN THIS ACCOUNT HAS BEEN CONSIDERE D AS SALE OF THE ASSESSEE. A NET PROFIT ON THIS SALE HAS TO BE APPLIED. THIS AS PECT HAS BEEN ACCEPTED BY THE ITAT IN THE ASSTT.YEAR 2008-09. CONSIDERING ALL TH ESE ASPECTS, I DIRECT THE AO TO RE-COMPUTE THE ADDITION ON THE ALLEGED DEPOSI TS OF RS.27,88,729/- BY APPLYING A NET PROFIT RATE OF 7.5%. ADDITION TO TH IS EXTENT IS CONFIRMED. 8. AS FAR AS SECOND GRIEVANCE OF THE ASSESSEE IS CO NCERNED, I FIND THAT THE ASSESSEE HAD MADE DEPOSIT AMOUNTING TO RS.2,00,825/ - IN THE COSMOS CO-OP. BANK LTD. AS WELL AS IN THE CITY UNION BANK. THE A SSESSEE FAILED TO EXPLAIN THE SOURCE OF DEPOSITS. HE ONLY CONTENDED BEFORE T HE LD.CIT(A) THAT SOME OF THE FDRS. WERE MADE IN EARLIER YEARS. THE LD.CIT(A ) HAS ALREADY DIRECTED THE AO TO VERIFY THE DATES OF DEPOSITS AND THEN TAKE RE MEDIAL ACTION IN THE YEAR IN WHICH DEPOSITS WAS MADE FOR THE FIRST TIME. NO DOU BT, THE LD.CIT(A) HAS NO POWER TO REMIT ANY ISSUE TO THE FILE OF THE AO, BUT CONSIDERING THE PLEA OF THE ASSESSEE THAT SOME OF THE FDRS. WERE MADE IN EARLIE R YEARS, THE ADDITION OF THIS AMOUNT CANNOT BE MADE IN THE ACCOUNTING PERIOD RELEVANT TO THIS YEAR. THEREFORE, I DIRECT THE AO TO VERIFY THE DATE OF IN ITIAL DEPOSITS OF THE FDRS. AND THEREAFTER TAKE APPROPRIATE ACTION AGAINST THE ASSESSEE. THIS GROUND IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON 13 TH JULY, 2016 AT AHMEDABAD. SD/- (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 13/07/2016