Jabibur Rahaman, Murshidabad V. ITO, Ward - 3, Murshidabad, Murshidabad

ITA 119/KOL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75068 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2014
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 06-03-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 20-01-2012
• Court: TRIBUNAL
• Department Lawyers: APURBA KR DAS
• Assessee Lawyers: S K TULSIYAN
• Keywords: Business income; Peak credit
• Section: 143(3); 142(1)

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA () BEFORE , /AND . . . . ' '' ''# '#'# '#, $% ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI ABRAHAM P. GEORGE, AM] & & & & / I.T.A NO. 119/KOL/2012 '( )* '( )* '( )* '( )*/ // / ASSESSMENT YEAR: 2008-09 JABIBUR RAHAMAN VS. INCOME-TAX OFFICER, WD-3, MURSHIDABAD (PAN: AKGPR0247N) (,- /APPELLANT ) (./,-/ RESPONDENT ) DATE OF HEARING: 05.02.2014 DATE OF PRONOUNCEMENT: 13.02.2014 FOR THE APPELLANT: SHRI S. K. TULSIYAN, ADVOCATE FOR THE RESPONDENT: SHRI APURBA KR. DAS, JCIT, D R $0 / ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-XXXVI, KOLKATA IN APPEAL NO. 516/CIT(A)-XXXVI/KOL/WARD-3,MSD/10-11 DATED 02. 11.2011. ASSESSMENT WAS FRAMED BY ITO, WARD-3, MURSHIDABAD U/S. 143(3) OF THE INCO ME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2008-09 VIDE HIS ORDER DATED 23.12.2010. 2. THE FIRST ISSUE IN THIS APPEAL OF ASSESSEE IS AG AINST THE ORDER OF CIT(A) CONFIRMING THE ADDITION OF RS.3,81,383/- ON ACCOUNT OF GROSS PROFI T. FOR THIS, ASSESSEE HAS RAISED FOLLOWING TWO GROUNDS: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN NOT ACCEPTING THE BANK ACCOUNT OF THE PARTNERSHIP FIRM, WHICH WAS OPENED IN THE NAME OF A PARTNER. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.3,81,383/- ON ACCOUNT OF GROSS PROFIT. 3. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH FA CTS AND CIRCUMSTANCES OF THE CASE. BRIEFLY STATED FACTS ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE TOTAL SALES AS PER TRADING ACCOUNT IS AT RS.53, 67,500/- AND ASSESSEE HAS DISCLOSED GROSS PROFIT @ 4.68%. ACCORDING TO ASSESSEES COUNSEL, IT HAS N O OTHER BANK ACCOUNTS EXCEPT THE DISCLOSED ONE BUT SUBSEQUENTLY IT HAS COME TO THE NOTICE OF A O THAT ASSESSEE IS MAINTAINING ANOTHER BANK 2 ITA NO.119/K/2012 JABIBUR RAHAMAN , AY:2008-09 ACCOUNT OF AXIS BANK, BERHAMPORE BRANCH I.E. A/C. N O. 163010100102292 AND ASSESSEES LEDGER COPY WAS COLLECTED FROM AXIS BANK FOR THE RE LEVENT PERIOD. THE AO COMPUTED THE DEPOSITS BY WAY OF CHEQUE AND CASH ON DIFFERENT DAT ES IN THE ABOVE STATED BANK ACCOUNT OF SHRI JABIBPUR RAHAMAN, THE ASSESSEE AT RS.1,05,75,502/- AND CLOSING BALANCE WAS FOUND AT RS.2,85,412/- AS ON 31.03.2008. WHEN THE ASSESSEE WAS ASKED TO EXPLAIN THE TRANSACTIONS, ASSESSEES COUNSEL BEFORE AO VIDE LETTER DATED 25.1 0.2010 EXPLAINED THAT THE SAID BANK ACCOUNT WITH AXIS BANK IS BEING MAINTAINED UNDER A PARTNERSHIP WRITTEN DOWN BY A PARTNERSHIP DATED 31.03.2007 AND ALL THE TRANSACTION OF PARTNE RSHIP TO BE PASSED THROUGH THAT BANK ACCOUNT BECAUSE OPENING NEW BANK ACCOUNTS WARRANTS A CONSID ERABLE TIME FOR COMPLYING DIFFERENT FORMALITIES. SO THE FACT REMAINS THAT THE ASSESSEE SRI JABIBUR RAHAMAN WHO HAD BEEN CARRYING THE BUSINESS OF PROCURING AND SELLING HUMAN HAIR SINCE PRETTY LONG TIME UNDER PROPRIETORSHIP AND IN HIS NAME JABIBUR RAHAMAN MAINTAINS THE SAID BANK ACCOUNT NO. 163010100102292 WITH AXIS BANK. THIS OPENING BALANCE IS ON 01.04.2007. IT HAS BEEN STATED IN HIS LETTER THAT THE ASSESSEE HAD THE INTENTION TO FORM A PARTNERSHIP TO RUN THE BUSINESS OF SALE OF HUMAN HAIR EFFECTIVELY AND SMOOTHLY. IN REALITY, THE ASSESSEE WAS FOUND TO CARRY ON TWO BUSINESS ACTIVITY IN THE SAME LINE AND IN THE SAME NAME. BUT ONE IN IND IVIDUAL CAPACITY AND ANOTHER IN PARTNERSHIP BY FORMING AN ALLEGED PARTNERSHIP DEED DATED 31.03. 2007. THE ASSESSEE CLAIMED THAT THIS ACCOUNT WAS UNDER THE PARTNERSHIP FIRM RUN VIDE PAR TNERSHIP DEED DATED 31.03.2007 UNDER THE SAME NAME OF JABIBUR RAHAMAN. BUT THE AO WAS NOT C ONVINCED AND TREATED THE TRANSACTIONS OF RS.1,35,22,943/- BEING (I.E. RS.81,55,443/- + RS.53 ,67,500/-) AND APPLYING G.P. RATE OF 4.68% COMPUTED THE PROFIT FROM TRADING ACCOUNT AT RS.6,3 2,873/- AND THEREBY ADDED AN INCOME OF RS.3,81,383/- TO THE DISCLOSED G.P. AGGRIEVED, ASS ESSEE PREFERRED APPEAL BEFORE CIT(A), WHO CONFIRMED THE ACTION OF AO VIDE PARAS 4 AND 5 AS UN DER: 4. I HAVE DULY CONSIDERED THE SUBMISSION OF THE AR OF THE APPLLANT AND SEEN THE DETAILS FILED AND I FIND MYSELF NOT IN AGREEMENT WITH HIM. THERE IS NO DISPUTE THAT THE SB A/C. NO. 163010100102292 WAS OPENED BY THE APPELLANT HIMSELF IN HIS INDIVIDU AL NAME AND USING HIS INDIVIDUAL PAN. FURTHER, THE BANK ACCOUNT WAS O PENED ON 02/03/2007, WHEREAS, THE PURPORTED FIRM [FIRMS NAME AND APPELLANTS NAME ARE EXACTLY SAME] CAME INTO EXISTENCE ON AND FROM 22.03.2007 WITHOUT HAVING PAN AND THE D EED OF PARTNERSHIP WAS NATARIZED ON 31.03.2007. THE PAN WAS APPLIED FOR AND ALLOTTE D JUST BEFORE THE RETURN OF THE FIRM WAS FILED ON 31.03.2010. THE RETURN OF THE FIRM WA S FILED MUCH AFTER ISSUING OF NOTICES UNDER SECTIONS 143(2) AND 142(1) OF THE ACT IN THE CASE OF THE APPELLANT ON 24/08/2009. AS PER THE SAD RETURN OF THE FIRM, A NET LOSS OF RS.4 ,896.50 HAS BEEN DISCLOSED ON A TURNOVER OF RS.81,55,443.50. ALL THESE CLINCHING EVDENCES H AVE ESTABLISHED BEYOND DOUBT THAT THE SB ACCOUNT WITH AXIS BANK WAS ACTUALLY APPELLANTS OWN, WHICH REMAINED UNDISCLOSED IN THE RETURN. THE ONLY PURPOSE OF CREATION OF THE PAR TNERSHIP FIRM WAS TO AVOID TAX BURDEN ON ACCOUNT OF THE TRANSACTIONS MADE IN THE UNDISCLO SED BANK ACCOUNT, UNEARTHED BY THE AO. UNDER THE FACTS AND CIRCUMSTANCES, I AM IN AGRE EMENT WITH THE AO THAT THE SAID UNDISCLOSED BANK ACCOUNT HAS TO BE TREATED AS APPEL LANTS OWN. 3 ITA NO.119/K/2012 JABIBUR RAHAMAN , AY:2008-09 5. THE AO MADE THREE ADDITIONS ON THE BASIS OF TRAN SACTIONS FOUND IN THE UNDISCLOSED BANK ACCOUNT I.E SB A/C. NO.163010100102292 WITH AXS BA NK, BERHAMPORE BRANCH. FOR THE ESTIMATED GROSS PROFIT ADDITION AT RS.3,81,383/-, T HE AO ADOPTED SAME G.P. PERCENTAGE OF 4.68% AS TAKEN BY THE APPELLANT FOR HIS DISCLOSED TURNOVER. THEREFORE, I CANT SAY THAT THE AO WAS NOT RIGHT IN HIS DECISION. THE ADDITION OF R S.3,81,383/- IS THEREFORE, CONFIRMED. 4. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE FILED PAPER BOOK CONSISTS OF PAGES 1 TO 40 AND DREW OUR ATTENTION TO THE PARTNERSHIP DEED DATED 30 .03.2007 WHICH IS EFFECTIVE W.E.F. 23.03.2007 VIDE CLAUSE 3, WHICH READS AS UNDER: THE PARTNERSHIP BUSINESS SHALL BE DEEMED TO HAVE C OMMENCED ON AND FROM 23.03.2007 AND SHALL CONTINUE UNTIL DISSOLVED. LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO CLAUSE 12 OF PARTNERSHIP DEED, WHICH READS AS UNDER: 12. THE BANK ACCOUNT BEARING NO. 163010100102292 WITH A XIS BANK LTD., BERHAMPORE BRANCH WHICH HAS ALREADY BEEN OPENED, SHALL BE TREA TED AS THE BANK ACCOUNT OF THE PARTNERSHIP BUSINESS AND THAT SHALL BE OPERATED BY THE PARTY OF THE FIRST PART AS EARLIER. LD. COUNSEL STATED THAT THIS PARTICULAR BANK ACCOUN T IS IN THE NAME OF FIRM JABIBUR RAHAMAN AND NOT IN THE INDIVIDUAL CASE OF THE ASSESSEE WHERE TH IS ADDITION IS MADE. ON QUERY FROM THE BENCH, LD. SR. DR COULD NOT REBUT THE FACTUAL POSIT ION OF THE ASSESSEES CASE AND COULD NOT CONTRADICT THE ARGUMENTS MADE BY LD. COUNSEL FOR TH E ASSESSEE. WE FIND THAT THERE IS A PARTNERSHIP FIRM NAMELY JABIBUR RAHAMAN HAVING THE FOLLOWING PARTNERS: SRI JABIBUR RAHAMA 60% SRI AJMAIL SK. 40% WE FIND THAT THIS PARTNERSHIP DEED WAS MADE EFFECTI VE FROM 23.03.2007 AND THE RELEVANT ASSESSMENT YEAR INVOLVED IS 2008-09. IT MEANS THAT THE PARTNERSHIP FIRM HAS NOW OWNED UP THIS ACCOUNT, THE REVENUE SHOULD TAKE ACTION IN THE HAND S OF THE FIRM AND NOT IN THE HANDS OF INDIVIDUAL, IF LAW PERMITS. WE DIRECT THE AO TO DE LETE THIS ADDITION IN THE HANDS OF INDIVIDUAL I.E. THE ASSESSEE AND IF ANY ACTION IS REQUIRED I.E . REQUIRED IN THE HANDS OF THE FIRM AND NOT IN THE HANDS OF THE INDIVIDUAL. ACCORDINGLY, THIS ISSUE I S DECIDED IN FAVOUR OF THE ASSESSEE. 5. COMING TO SECOND ISSUE OF THE ASSESSEES APPEA L REGARDING RESTRICTING THE ADDITION OF PEAK CREDIT AT RS.10,60,742/- AS AGAINST THE TOTAL ADDITION OF RS.18,02,087/-. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE BANK ACCOUNT MAINTAINED WITH AXIS BANK IS UNDER DISPUTE I.E. THE DEPOSITS AND 4 ITA NO.119/K/2012 JABIBUR RAHAMAN , AY:2008-09 WITHDRAWALS AT RS.1,02,92,960/-. THE AO HAS ADDED PEAK CREDITS AT RS.18,02,087/- AND CIT(A) RESTRICTED THE PEAK AT RS.10,60,742/-. AS WE HAVE ALREADY ADJUDICATED THE ABOVE ISSUE HOLDING THAT THIS BANK ACCOUNT BELONGS TO PARTNERSHIP FIRM AND NOT TO THE INDIVIDUAL, TAKING THE SAME VIEW, WE DIRECT THE AO TO TAKE ACTION IN THE HANDS OF THE FIRM, IF ANY AND THAT ALSO AS PER LAW. WE DIRECT THE AO ACCORDINGLY. APPEAL OF ASSESSEE I S ALLOWED. 7. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. 8. ORDER IS PRONOUNCED IN THE OPEN COURT ON 13 TH FEB., 2014 SD/- SD/- . . . . ' '' ''# '#'# '# , $% , (ABRAHAM P. GEORGE) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 13TH FEBRUARY, 2014 12 '3' 4 JD.(SR.P.S.) $0 5 . 6$ )7- COPY OF THE ORDER FORWARDED TO: 1 . ,- / APPELLANT JABIBUR RAHAMAN, MADHYAMPUR, BAGANPARA BELDANGA, MURSHIDABAD. 2 ./,- / RESPONDENT ITO, WARD-3, MURSHIDABAD, 3 . 0' ( )/ THE CIT(A), KOLKATA 4. 5. 0' / CIT KOLKATA <= .' / DR, KOLKATA BENCHES, KOLKATA / ./ TRUE COPY, $0'>/ BY ORDER, ' /ASSTT. REGISTRAR .