Parmod Kumar, Patiala V. ITO, Patiala

ITA 1175/CHANDI/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73607 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 20-12-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.1175/CHD/2013 ASSESSMENT YEAR : 2008-09 SHRI PARMOD KUMAR, VS THE INCOME TAX OFFICER, HOUSE NO. 174/6, WARD 2, OLD BISHAN NAGAR, PATIALA. PATIALA.. PAN : ACSPK3923E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAKESH CAJLA RESPONDENT BY : SHRI AKHILESH GUPTA DATE OF HEARING : 26.03.2014 DATE OF PRONOUNCEMENT : 28.03.2014 O R D E R PER SUSHMA CHOWLA, JM THE APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), PATIALA DATED 25.10.2013 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF TH E INCOME-TAX ACT, 1961 ( 'THE ACT' FOR SHORT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX APPEAL (S) PATIALA IS BAD IN LAW AND AGAINST FACTS OF THE CASE. 2. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS), PATIALA IS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF RS.4, 14,165/-, MADE BY THE ASSESSING OFFICER MERELY ON SURMISES, CONJECTURES AND ON ESTIMATED BASIS. THE INFORMATION RELIED UPON BY THE ASSESSING OFFICER WAS NEVER CONFRONTED TO THE APPELLANT. 2.1 WHILE DOING SO HE FAILED TO APPRECIATE THE FACT THAT THERE WAS NO MATERIAL ON RECORD INDICATING THE PROFIT MARGIN OF THE APPELLANT IS 10%. 2 3. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS A GAINST ESTIMATION OF INCOME IN THE HANDS OF THE ASSESSEE. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E WAS WORKING AS AGENT FOR ISSUE OF PERMIT OF COMMERCIAL VEHICLES BY THE REGIONAL TRANSPORT AUTHORITY, PATIALA. THE ASSESSING OFFICE R RECEIVED AIR INFORMATION THAT DURING THE YEAR UNDER CONSIDERATIO N, THERE WERE CASH DEPOSITS EXCEEDING RS. 10 LACS IN THE BANK ACC OUNT OF THE ASSESSEE. THE EXPLANATION OF THE ASSESSEE REGARDIN G THE SOURCE OF THE SAID DEPOSITS IN HIS BANK ACCOUNT WAS THAT THE OUT STATION PARTIES/CLIENTS DEPOSITED THE CASH IN THE ACCOUNT O F THE ASSESSEE FOR GETTING PUNJAB STATE/NATIONAL PERMITS THROUGH THE A SSESSEE. THE SAID CASH DEPOSITED BY THE RESPECTIVE CLIENTS WAS U TILIZED FOR PURCHASING DRAFTS FOR DEPOSITING THE PERMIT FEE. T HE ASSESSING OFFICER REQUISITIONED THE ASSESSEE TO RECONCILE THE DATE-WISE CASH DEPOSITS WITH CONFIRMATION FROM THE PERSONS WHO HAD MADE THE CASH DEPOSITS IN ASSESSEE'S BANK ACCOUNT FOR OBTAINING PERMITS THROUGH HIM. THERE WAS TOTAL DEPOSIT OF RS. 57,51,650/- IN THE ACCOUNT OF THE ASSESSEE. THE ASSESSEE HAD FURNISHED LIST OF 15 73 CASES OF THE PARTIES WHO HAD APPLIED FOR PERMITS THROUGH THE ASS ESSEE. THE ASSESSEE WAS CHARGING RS. 100/- PER CASE WHICH WAS FOUND TO BE ON THE LOWER SIDE BY THE ASSESSING OFFICER THROUGH THE MARKET ENQUIRIES. THE ASSESSING OFFICER FIRST APPLIED RAT E OF RS. 500/- PER CASE TO THE LIST OF 1573 CASES WHICH WORKED OUT TO RS. 7,86,500/-; HOWEVER IN THE INTEREST OF JUSTICE 10% OF NET PROFI T RATE ON TOTAL CASH RECEIPTS WAS APPLIED TO DETERMINE THE INCOME O F THE ASSESSEE WHICH WORKED OUT TO RS. 5,65,165/- AGAINST WHICH TH E ASSESSEE HAD SHOWN AN INCOME OF RS. 1,51,000/- ONLY. THE BALANC E AMOUNT OF RS. 4,14,165/- WAS ADDED AS UNDISCLOSED INCOME FROM BUS INESS IN THE HANDS OF THE ASSESSEE. 3 5. THE COMMISSIONER OF INCOME TAX (APPEALS) UPHELD THE ORDER OF THE ASSESSING OFFICER. THE ASSESSEE IS IN APPEAL AGAINST THE SAID ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). 6. SHRI RAKESH CAJLA APPEARED FOR THE ASSESSEE AND SHRI AKHILESH GUPTA APPEARED FOR THE REVENUE AND PUT FORWARD THEI R CONTENTIONS. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE WAS WORKING AS AN AGENT FOR ISSUE OF P ERMITS OF COMMERCIAL VEHICLES FROM REGIONAL TRANSPORT AUTHORI TY, PATIALA. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE H AD DECLARED INCOME FROM BUSINESS AT RS.1,51,000/- BUT NO BOOKS OF ACCOUNT WERE MAINTAINED BY THE ASSESSEE. THE ASSESSING OFFICER D URING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE H AD APPLIED FOR PERMITS TO BE ISSUED IN 1573 CASES. THE CLAIM OF TH E ASSESSEE WAS THAT IT WAS CHARGING RS. 100/- PER CASE. HOWEVER, THE LOCAL ENQUIRIES FROM OTHER AGENTS MADE BY THE ASSESSING O FFICER REVEALED THAT IN THIS LINE OF BUSINESS RS. 500/- APPROXIMATE LY WAS BEING CHARGED FOR OBTAINING PERMIT. HOWEVER, THE ASSESSI NG OFFICER RESTRICTED THE NET PROFIT TO 10% OF TOTAL CASH RECE IPTS AND THE BUSINESS INCOME IN THE HANDS OF THE ASSESSEE WAS DE TERMINED AT RS. 565,165/- AND AFTER ALLOWING CREDIT OF THE BUSINESS INCOME DECLARED BY THE ASSESSEE AT RS. 1,51,000/-, THE BALANCE OF R S. 4,14,165/- WAS ADDED AS INCOME OF THE ASSESSEE AS UNDISCLOSED INCO ME. WE ARE IN CONFORMITY WITH THE ORDERS OF THE AUTHORITIES BELOW THAT THE BUSINESS INCOME DECLARED BY THE ASSESSEE IS AT THE LOWER SID E, KEEPING IN MIND THE MARKET CONDITIONS. THE ASSESSING OFFICER, IN FINAL ANALYSIS HAD APPLIED AN APPROXIMATE RATE OF RS. 359 /- PER CASE AS THE INCOME HAD BEEN ESTIMATED AT 10% OF THE TOTAL CASH DEPOSITED IN THE BANK ACCOUNT. IN THE TOTALITY OF THE FACTS AND CIR CUMSTANCES AND 4 FOLLOWING THE PRINCIPLE OF JUSTICE, WE DEEM IT FIT TO ESTIMATE THE INCOME IN THE HANDS OF THE ASSESSEE @ RS. 250/- PER CASE. THE ASSESSING OFFICER IS DIRECTED TO RECOMPUTE INCOME I N THE HANDS OF THE ASSESSEE ACCORDINGLY. THE GROUNDS OF APPEAL RA ISED BY THE ASSESSEE ARE THUS, PARTLY ALLOWED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH MARCH,2014. SD/- SD/- ( T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 28 TH MARCH,2014 POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR. ASSISTANT REGISTRAR ITA T,CHD.