Shri Jatinkumar Ganeshbhai Patel, Mehsana V. The Income Tax Officer, Patan Ward-5, Mehsana

ITA 1132/AHD/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9339 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 09-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVATIA
• Keywords: Gift; Principle of natural justice; Additional evidence; Set aside
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI KUL BHARAT , J UDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT M EMBER ./ ITA NO. 1132/AHD/2017 ( / ASSESSMENT YEAR : 2008 - 09 ) J ATINKUMAR GANESHBHAI PATEL SENMAVAS BAJI PATEL NI VOHARVAD VISNAGAR MEHSANA 384 315 / VS. THE ITO PATAN WARD - 5 MEHSNA ./ ./ PAN/GIR NO. : ARRPP 8029 J ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI S.N. DIVATIA, AR / RESPONDENT BY : SHRI ANAND KUMAR, SR.DR / DATE OF HEARING 26/08/2019 / DATE OF PRONOUNCEMENT 01 / 10 /201 9 / O R D E R PER WASEEM AHMED , ACCOUNTANT MEMBER : THE CAPTIONED APPEAL HA S BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMIS SIONER OF INCOME TAX (APPEALS) GANDHINAGAR, A HMEDABAD [CIT (A) IN SHORT] VIDE APPEAL NO. CIT(A) /GNR/335/2015 - 16 DATED 10/03/2017 ARISING IN THE A SSESSMENT ORDER PASSED UNDER S. 14 4 R.W.S.147 OF THE INCOME TAX ACT, 1961( HEREINAFTER REFERRED TO AS 'THE ACT') DATED 31/12/2015 RELEVANT TO ASSESSMENT YEAR (AY) 2008 - 09. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - ITA NO. 1132/AHD/2017 JATINKUMAR GANESHBHAI PATEL VS. ITO A SST.YEAR - 2008 - 09 - 2 - 1.1. THE ORDER PASSED U/S.250 ON 10.03.2017 FOR A. Y . 2008 - 09 BY CIT(A) - GNR , ABAD CONFIRMING THE ADDITION TO THE EXTENT OF RS.4,25,421/ - IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 1.2. THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN NOT CONSIDERING FULLY AND PROPERLY THE SUBMISSIONS MADE BY THE APPELLANT. 2.1. THE LD.CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN UPHOLD ING THE ADDITION TO THE EXTENT OF RS.4,25,421/ - CONSISTING OF RS.1,14,183/ - BEING PROFIT IN RESPECT OF THE BUSINESS OF RECHARGE OF SIM, MOBILE ETC., RS.2,21,238/ - BEING OPENING CASH BALANCE AND RS.90,000/ - BEING CASH LOAN RECEIVED FROM TWO PARTIES. 2.2. TH AT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN UPHOLDING THE ADDITION TO THE EXTENT OF RS.4,25,421/ - CONSISTING OF RS.1,14,183/ - BEING PROFIT IN RESPECT OF THE BUSINESS OF RECHARGE OF SIM, MOBILE ET C., RS.2,21,238/ - BEING OPENING CASH BALANCE AND RS.90,000/ - BEING CASH LOAN RECEIVED FROM TWO PARTIES. 3.1. SINCE, THE APPELLANT HAS NOT BEEN ISSUED NOTICE U/S.143(2) WITHIN THE STATUTORY PERIOD, THE IMPUGNED ASST. IS ILLEGAL AND UNLAWFUL. 3.1. WITHOUT PREJUDICE TO THE ABOVE AND IN THE ALTERNATIVE, THE IMPUGNED ADDITION OF RS.4,25,421/ - CONFIRMED BY CIT(A) IS HIGHLY EXCESSIVE AND CALLS FOR REDUCTION AS WELL AS TELESCOPING WITH NET PROFIT DURING THE YEAR. T HE ASSESSEE HAS RAISED AS MANY AS 3 GROUNDS OF A PPEAL BUT THE ISSUE S RAISED IN ALL THE GROUNDS OF APPEAL ARE INTERCONNECTED. THEREFORE WE HAVE CLUBBED ALL OF THEM TOGETHER FOR THE PURPOSE OF ADJUDICATION AND BREVITY. THE INTERCONNECTED ISSUE RAISED BY THE ASSESSEE IN THIS APPEAL IS THAT THE LEARNED CIT (A) ERRED IN PARTLY CONFIRMING THE ORDER OF THE AO TO THE EXTENT OF RS. 4,25,421/ - ONLY ON ACCOUNT OF VARIOUS ADDITION. 2. BRIEFLY STATED FACTS ARE THAT THE ASSESS EE IN THE PRESENT CASE IS AN INDIVIDUAL AND CLAIMED TO BE ENGAGED IN THE BUSINESS OF SELLING THE ITA NO. 1132/AHD/2017 JATINKUMAR GANESHBHAI PATEL VS. ITO A SST.YEAR - 2008 - 09 - 3 - RECHARGE COUPONS - SIM CARDS ETC. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION HAS DEPOSITED THE CASH OF RS. 21,82,000/ - IN HIS SAVING BANK ACCOUNT BUT FAILED T O JUSTIFY THE SOURCE OF SUCH DEPOSIT DURING THE ASSESSMENT PROCEEDINGS. THEREFORE THE ENTIRE AMOUNT WAS TREATED AS UNACCOUNTED/UNDISCLOSED INCOME OF THE ASSESSEE AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO THE LEARNED CIT (A). 3. THE ASSESSEE BEFORE THE LEARNED CIT(A) SUBMITTED THAT HE HAS DEPOSITED THE SALE PROCEEDS IN THE BANK ACCOUNT FOR ISSUING CHE QUES TO THE COMPANY NAMELY AIRTEL AND OTHER COMMUNICATION COMPANIES. THE ASSESSEE ALSO CLAIMED TO HAVE MADE A PROFIT OF RS. 74,782/ - OUT OF ITS BUSINESS TRANSACTIONS WHICH IS BELOW THE TAXABLE LIMIT. THEREFORE THE RETURN WAS NOT FILED. THE ASSESSEE IN SUPPORT OF HIS CLAIM ALSO FILED THE COPIES OF THE ANNUAL ACCOUNTS. 3.1 THE DETAILS FILED BY THE ASSESSEE WERE FORWARDED BY THE LEARNE D C IT - A TO THE AO FOR HIS REMAND REPORT. THE AO IN TURN SUBMITTED THAT THE ASSESSEE FAILED TO JUSTIFY THE OPENING CASH BALANCE OF RS. 2,21,238/ - AND THE LOAN TAKEN FROM THE 2 PARTIES NAMELY KANUBHAI GOVINDBHAI PATEL AND GANESHBHAI NA THALAL PATEL FOR RS. 45,000 EACH. THE AO ALSO SUBMITTED THAT SUCH LOAN WAS TAKEN IN CASH IN CONTRAVENTION TO THE PROVISIONS OF SECTION 269SS OF THE ACT. ITA NO. 1132/AHD/2017 JATINKUMAR GANESHBHAI PATEL VS. ITO A SST.YEAR - 2008 - 09 - 4 - 4. THE LEARNED CIT (A) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND THE REMAND REPORT OF THE AO WORKED OUT THE PROFIT AT THE RATE OF 5% OF THE CASH DEPOSITED IN THE BANK AMOUNTING TO RS. 1,10,884/ - 4.1 THE LEARNED CIT (A) ALSO CONFIRMED THE ADDITION ON ACCOUNT OF OPENING CASH BALANCE OF RS. 2,21,238/ - AND THE LOAN TAKEN FROM THE PARTIES FOR RS. 90,000/ - IN THE ABSENCE OF SUFFICIENT DOCUMENTARY EVIDENCE. BEING AGGRIEVED BY T HE ORDER OF THE LEARNED CIT (A) , THE ASSESSEE IS IN APPEAL BEFORE US. 5 . THE LEARNED AR BEFORE US SUBMITTED AS UNDER: 1. AS PER ANNUAL ACCOUNT, THE NET PROFIT FROM TEL ECOMMUNICATION BUSINESS WAS RS.74,782/ - . IT CANNOT BE SAID TO BE A RETAI L BUSINESS WHEREIN NP WOULD BE 5%. 2. THE ASSESSING OFFICER HAS DISPUTED THE QUANTUM OF OPENING CASH BALANCE IN HIS REMAND REPORT BUT IN VIEW OF NATURE OF BUSINESS, FAMILY STATUS ETC. TH E OPG BALANCE OF RS.221,238/ - WAS REASONABLE. 3. IT CANNOT BE A CASE THAT THERE WAS NO OPENING CASH WITH HIM. 4. THE BOOKS FOR THE CURRENT YEAR ARE NOT REJECTED BY ASSESSING OFFICER. ITA NO. 1132/AHD/2017 JATINKUMAR GANESHBHAI PATEL VS. ITO A SST.YEAR - 2008 - 09 - 5 - 5. RS.90,000/ - IS GIFT RECEIVED FROM TWO PARTIES OF RS.45,000 / - EACH. THEIR CONFI RMATION, P AN, ITR AND 7/12 ARE PRODUCED AS ADDITIONAL EVIDENCE. 6 . ON THE OTHER HAND THE LEARNED DR VEHEMENTLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 7 . WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS A VAILABLE ON RECORD. AT THE OUTSET, WE NOTE THAT THE BUSINESS ACTIVITY OF THE ASSESSEE HAS NOT BEEN DOUBTED AND THEREFORE IN OUR CONSIDERED VIEW LEARNED CIT (A) HAS CORRECTLY WORKED OUT THE PROFIT OF THE ASSESSEE AT THE RATE OF 5% ON THE CASH DEPOSITED WITH BANK. HOWEVER, IT IS PERTINENT TO NOTE THAT THE AMOUNT OF OPENING CASH BALANCE OF RS. 2,21,238/ - AND THE LOAN TAKEN FROM THE PARTIES FOR RS. 90,000/ - TO BE EXCLUDED WHILE DETERMINING THE PROFIT AT THE RATE OF 5% ON THE CASH DEPOSITS. IT IS BECAUSE; SUCH A MOUNT HAS ALREADY BEEN ADDED INDEPENDENTLY BY THE AUTHORITIES BELOW. 7.1 REGARDING THE GIFT TAKEN FROM THE PARTIES FOR RS. 90,000, WE NOTE THAT THE ASSESSEE HAS FILED CONFIRMATION FROM BOTH THE PARTIES BEFORE US WHICH IS THE ADDITIONAL EVIDENCE. THEREFOR E IN THE INTEREST OF JUSTICE AND FAIR PLAY WE ARE INCLINED TO SET ASIDE THIS ISSUE TO THE FILE OF THE AO FOR FRESH ADJUDICATION AS PER THE PROVISIONS OF LAW AND IN THE LIGHT OF THE DOCUMENTS FILED BY THE ASSESSEE. ITA NO. 1132/AHD/2017 JATINKUMAR GANESHBHAI PATEL VS. ITO A SST.YEAR - 2008 - 09 - 6 - 7.2 REGARDING THE ADDITION OF THE OPENING CASH BALANCE, WE SET ASIDE THIS ISSUE TO THE FILE OF THE AO WITH THE DIRECTION THAT THE ASSESSEE SHALL FURNISH THE CASH FLOW STATEMENT AND THEREAFTER THE AO WILL ADJUDICAT THE SAME A FRESH AS PER THE PROVISIONS OF LAW. 8 . IN VIEW OF THE ABOVE , THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR THE STATISTICAL PURPOSES. THIS ORDER PRONOUNCED IN OPEN COURT ON 01 / 10 /201 9 - SD - - SD - ( KUL BHARAT ) ( WASEEM AHMED ) JUDICIAL MEMBER ACCOUNTANT MEMBER (TRUE COPY) A HMEDABAD; DATED 01 / 10 /20 1 9 . . , . . . / T.C. NAIR, SR. PS