HIREN BECHAR PATEL, ULHASNAGAR V. ITO WD 2(5), THANE

ITA 1263/MUM/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 5971 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2012-2013
• Appeal Filed On: 22-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VIMAL PUNMIYA AR SHRI ADAGIRI
• Keywords: Unexplained cash credit; Business income; Salary income; Opportunity of being heard; Additional evidence
• Section: 142(1); 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI M. BALAGANESH , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 1263 /MUM/201 7 ( / ASSESSMENT YEAR: 20 1 2 - 13 ) HIREN BECHAR PATEL MUKUND, BK NO.492/B, ROOM NO .1, FIRST FLOOR, AMAN TALKIES, ULHASNAGAR - 421002. / VS. ITO WARD 2(5) KALYAN, THANE - 421002. ./ ./ PAN/GIR NO. : AOLPP7438Q ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 20 / 0 6 / 201 9 / DATE OF PRONOUNCEMENT : 31 / 07 / 201 9 / O R D E R PER AMARJIT SINGH, J M: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 21 . 11 .201 6 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 3 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 20 12 - 1 3 . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - GROUND NO. I THE COMMISSIONER OF INCOME TAX (APPEALS) - 3, THANE [HEREINAFTER REFERRED TO AS CIT(A)] ERRED III PASSING THE ORDER WITHOUT APPRECIATING THE MATERIAL AVAILABLE ON RECORD. GROUND NO.2 ASSESSEE BY : SHRI VIMAL PUNMIYA (AR ) REVENUE BY: SHRI B. YADAGIRI (DR) ITA NO. 1263 / M/201 7 A.Y.20 12 - 13 2 THE CIT (A) ERRED IN COMPUTING THE ADDITION ON ACCOUNT OF LOW GROSS PROF IT AT RS.2,55,360/ - INSTEAD OF RS.I,12,220. THE APPELLANT SUBMIT THAT SINCE THE APPELLANTS HAD OFFERED THE PROFIT OF RS. 1,43,140/ - THE SAME OUGHT TO HAVE BEEN REDUCED FROM THE ESTIMATED PROFIT OF RS.2,55,360 / - . GROUND NO.3(A) THE CIT (A) ERRED IN CONFIRMI NG THE DISALLOWANCE OF RS.33,35,090 / - ON THE GROUND THAT THE APPELLANT HAS NOT BEEN ABLE TO PROVE THE CREDIT BALANCE PAYABLE TO CREDITORS FOR THE PURCHASE OF GOODS. THE APPELLANT SUBMIT THAT THE CREDITORS WERE GENUINE AS THE SALES DURING 2010 - 2011 AND 2011 - 2012 WERE OUT OF THE SAID PURCHASES AND NO ADDITION CAN BE MADE PURELY ON THE BASIS OF SURMISES AND CONJECTURES. GROUND NO.3(B) WITHOUT PREJUDICE TO GROUND NO.3(A), THE APPELLANT SUBMIT THAT SINCE THE AO HAS ESTIMATED THE GROSS PROFIT MARGIN, NO DISALLOWA NCE CAN BE MADE ON ACCOUNT OF PURCHASES MADE DURING THE YEAR. GROUND NO.4 THE CIT (A) ERRED IN CONFIRMING THE ADDITION OF RS.45,00,000 / - ON ACCOUNT OF UNEXPLAINED CASH CREDIT. THE APPELLANT SUBMIT THAT THE CREDIT OF RS.45,00,000 / - IS GENUINE AND EXPLAINABL E AND THEREFORE IS NOT COVERED BY THE PROVISIONS OF SECTION 68. THE APPELLANTS CRAVE LEAVE TO, ADD TO, ALTER OR AMEND THE ABOVE GROUNDS OF APPEAL OR TO ADD A NEW GROUND OF APPEAL AT ANY TIME BEFORE HEARING OF THE APPEAL. 3 . THE BRIEF FACTS OF THE CASE AR E THAT THE ASSESSEE FILED ITS RETU RN OF INCOME ON 24 . 0 1 .201 3 DECLARING TOTAL INCOME TO THE TUNE OF RS.5,48,704 / - . THE RETURN WAS PROCESSED U/S 143(1) OF THE I.T. ACT, 1961 ON 15.04.2013 . THE REAFTER, THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS . NOTICES U/ S 143(2) & 142(1) OF THE ACT WERE ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE DERIVED INCOME FROM RESALE OF CONSUMER PRODUCTS AND FOOD GRAINS UNDER THE NAME AND STYLE OF M/S. PATEL LOW PRICE SUP ER MARKET. ASSESSEE ALSO DERIVED INCOME FROM SALARY AT R S.5,00,000/ - FROM PATEL RETAIL PVT. LTD. AND INTEREST INCOME AT RS.1,403/ - FROM BANK. THE ASSESSEE HAS SHOWN THE ITA NO. 1263 / M/201 7 A.Y.20 12 - 13 3 INCOME FROM BUSINESS AT RS.1,43,140/ - AFTER DEDUCTION UNDER CHAPTER VIA OF RS.95,839/ - . THE ASSESSEE HAS OFFERED TOTAL INCOME TO THE TUNE OF RS .5,48,700/ - . THE ASSESSEE HAS SHOWN THE SALE IN SUM OF RS.25,53,598/ - AND NET PROFIT HAS BEEN SHOWN AT RS.1,43,140/ - . THE ASSESSEE WAS ASKED TO PRODUCE THE PROOF IN RESPECT OF SALES AND PURCHASES BUT NECESSARY EVIDENCE WAS NOT PRODUCED , THEREFORE, THE AO E STIMATED THE PROFIT ON SALE @ 10% TO THE TUNE OF RS.2,55,360/ - . THE ASSESSEE HAS SHOWN THE SUNDRY CREDITORS OF RS.55,41,390/ - AGAINST TOTAL PURCHASE IN SUM OF RS.16,50,920/ - . ON SEEING, THE BALANCE - SHEET OF PREVIOUS YEAR , THE OUTSTANDING SUNDRY CREDITORS AS ON 31.03.2011 WERE AT RS.38,90,470/ - . THE ASSESSEE WAS ASKED TO EXPLAIN TH E CREDIT BUT ASSESSEE ONLY PROVED THE IDENTITY OF THE CREDITORS HAVING AGGREGATE CREDIT IN SUM OF RS.22,06,300/ - , THEREFORE, THE REMAINING CREDIT WAS ADDED TO THE INCOME OF THE AS SESSEE. THE ASSESSEE HAS ALSO SHOWN UNSECURED LOAN OF RS.45,00,000/ - BUT FAILED TO PROVE THE CONFIRMATION, THEREFORE, THE SAID AMOUNT WAS ALSO ADDED TO THE INCOME OF THE ASSESSEE. IT WAS ALSO NOTICED THAT THE ASSESSEE DEPOSITED AN AMOUNT OF RS.27,53,447/ - IN HIS BANK ACCOUNT LIES WITH AXIS BANK. AMBERNATH BRANCH AND AN AMOUNT OF RS.4,20,000/ - IN JAI HIND CO - OP BANK AMBERNATH . IN REPLY, THE ASSESSEE EXPLAIN ED THAT HE DRAWN THE CASH LOAN OF RS.31,00,000/ - FROM ONE SMT. SANJIVANI SURESH SALUNKE WHO WAS AN AGRI CULTURIST AND THE BALANCE CASH WAS OUT OF HIS BUSINESS RECEIPTS. HOWEVER, IN SUPPORT OF HIS CLAIM HE ALSO FILED THE CONFIRMATION LETTER SMT. SURESH SALUNKE BUT FAILED TO EXPLAIN THE CASH DEPOSIT IN THE BANK, THEREFORE, THE AMOUNT OF RS.31,00,000/ - WAS ALSO ADDED TO THE INCOME OF THE ASSESSEE. THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS.1,15,96,010/ - . FEELING AGGRIEVED, THE ASSESSEE ITA NO. 1263 / M/201 7 A.Y.20 12 - 13 4 FILED AN APPEAL BEFORE THE CIT(A) WHO DISMISSED THE APPEAL OF THE ASSESSEE, THEREFORE, THE ASSESSEE HAS FIL ED THE PRESENT APPEAL BEFORE US. ISSUE NO. 1 4. I SSUE NO.1 IS FORMAL IN NATURE WHICH NOWHERE REQUIRED ANY ADJUDICATION. ISSUE NO. 2 5. WE HAVE HEARD THE ARGUMENTS ADVANCED BY THE LD. REPRESENTATIVE OF THE PARTIES . O N ACCOUNT OF FILING THE PRESENT APPEAL DELAYED , I T IS EXPLAINED BY LD. REPRESENTATIVE OF THE ASSESSEE THAT THE CIT(A ) HAS PASSED THE ORDER ON 21.11.2016 BUT THE ASSESSEE RECEIVED THE COPY OF ORDER ON DATED 26.12.2016, THEREFORE, THE PRESENT APPEAL IS NOT DELAYED. THE LD. REPRESENTATIVE OF THE A SSESSEE HAS FILED THE AFFIDAVIT IN THIS REGARD. THE ASSESSEE HAS ALSO FILED THE COPY OF ACKNOWLEDGMENT WHICH SPEAKS ABOUT THE RECEIPT OF ORDER AS ON 26.12.2016. SINCE THE APPEAL IS WITHIN THE PERIOD OF 60 DAYS W.E.F. RECEIPT OF THE COPY ORDER , THEREFORE, THERE IS NO DELAY OF FILING THE PRESENT APPEAL . UNDER THIS ISSUE THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF THE ADDITION OF O FFERED PROFIT IN SUM OF RS.1,43,140/ - IN THE ESTIMATED PROFIT OF RS.2,55,360/ - . THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARG UED THAT THE AO HAS ESTIMATED THE NET PROFIT @ 10% O F THE SALE IN SUM OF RS.25,53,598/ - I.E. 2,55,360/ - BUT THE AO NOWHERE REDUCED THE PROFIT SHOWN BY ASSESSEE IN SUM OF RS. 1,43,140/ - ,THEREFORE, THE PROFIT DECLARED BY ASSESSEE IS HEREBY LIABLE TO BE REDUCED FROM THE ESTIMATION OF PROFIT IN ACCORDANCE WITH LAW. HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS REFUTED THE SAID CONTENTION. ON APPRAISAL OF THE ORDER ITA NO. 1263 / M/201 7 A.Y.20 12 - 13 5 PASSED BY THE AO , WE FIND THAT THE AO HAS ASSESSED THE ESTIMATED PROFIT @ 10% O N TOTAL SALE IN SUM OF RS.25,53,598 I.E 2,55,360/ - . THE AO DID NOT GIVE ANY CREDIT TO THE PROFIT IN SUM OF RS. 1,43,140/ - SHOWN BY ASSESSEE IN HIS RETURN OF INCOME . SINCE THE PROFIT HAS BEEN ASSESSED BY AO @ 10% OF THE TOTAL SALE THEN IN THE SAID CIRC UMSTANCES, THE CREDIT IS LIABLE TO BE GIVEN OF THE NET PROF IT SHOWN BY ASSESSEE OF RS.1,43,140 / - . WE FIND FROM COMPUTATION OF TOTAL INCOME BY THE AO IN THE ASSESSM ENT ORDER, THE AO HAS NOT STARTED THE COMPUTATION FROM THE RETURNED INCOME OF THE ASSESSEE. H ENCE, THERE IS NO QUESTION OF GIVING REDUCTION FOR PROFIT ALREADY SHOWN BY ASSESSEE IN THE SUM OF RS.1,43,140/ - . HENCE, THE ISSUE NO. 2 IS DECIDED IN FAVOUR OF THE REVENUE . ISSUE NOS. 3 & 4 6. UNDER THESE ISSUES THE ASSESSEE HAS CHALLENGED THE CONFIRM ATION OF ADDITION OF RS.33,35,090/ - ON ACCOUNT OF NON - PROVING THE CREDIT BALANCE PAYABLE TO THE CREDITORS FOR THE PURCHASE OF GOODS AND CONFIRMATION OF THE ADDITION ON ACCOUNT OF UNEXPLAINED CA SH CREDIT IN SUM OF RS.45,00,000/ - . THE LD. REPRESENTATIVE OF THE AS SE SSEE HAS ARGUED THAT THE CREDIT WAS GENUINE PURCHASES WERE EFFECTED IN THE A.YS.2010 - 11 & 2011 - 12 . IT IS ALSO ARGUED THAT THE ASSESSEE WANTED TO ADDUCE THE EVIDENCE IN SUPPORT OF HIS CLAIM IN CONNECTION WITH THE UNEXPLAINED CASH CREDIT WHICH LIES AT PAGE NO. 31 TO 74 OF THE PA PER BOOK, T HEREFORE, IN THE SAID CIRCUMSTANCES EVIDENCE OF THE ASSESSEE IS LIABLE TO BE ADMITTED IN ACCORDANCE WITH LAW. HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE REVENUE HAS REFUTED THE SAID CONTENTION. IN SUPPORT O F THE CLAIM RAISED IN GROUND NO. 3 & 4. THE ASSESSEE WANTED TO ADDUCE THE ADDITIONAL EVIDENCE WHICH LIES AT PAG E NO.31 ITA NO. 1263 / M/201 7 A.Y.20 12 - 13 6 TO 74 OF THE PAPER BOOK, THEREFORE, IN THE SAID CIRCUMSTANCES, WE ADMIT THE EVIDENCE ADDUCE D BY LD. REPRESENTATIVE OF THE ASSESSEE AND S ET ASIDE THE FINDING OF THE CIT (A) ON THESE ISSUES AND RESTORE THESE ISSUES BEFORE THE AO TO DECIDE THE ISSUES NO. 3 & 4 AFRESH IN THE LIGHT OF EVIDENCE ADDUCIBLE BY ASSESSEE IN ACCORDANCE WITH LAW. NEEDLESS TO SAY THAT AN OPPORTUNITY OF BEING HEARD IS REQ UIRED TO BE GIVEN TO THE ASSESSEE BEFORE DECIDING THE MATTER OF CONTROVERSY IN ACCORDANCE WITH LAW . ACCORDINGLY, THESE ISSUES ARE DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE . 7 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED T O BE ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 31 /07 /2019 . SD/ - SD/ - ( M. BALAGANESH ) (AM ARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 31 /07 /2019 V IJAY / SR. PS ITA NO. 1263 / M/201 7 A.Y.20 12 - 13 7 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// (SR. PRIVATE SECRETARY) , / ITAT, MUMBAI