Dharam Pal Jain L/H Ajay Jain, New Delhi V. ITO, New Delhi

ITA 1284/DEL/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7190 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 08-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVINDER MANI
• Assessee Lawyers: REPUDAMEN THAKUR
• Keywords: Business income; Income from undisclosed sources; Revised return
• Section: 44AD; 143(3); 139(5); 68; 144

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C : NEW DELHI BEFORE SHRI I.C.SUDHIR , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI , ACCOUNTANT MEMBER S.A.NO.175/DEL/2016 I TA NO . 1284/DEL/2016 (ASSESSMENT YEAR: 2011 - 12 ) DHARAM PAL JAIN L/H AJAY JAIN, 189/8, PUNJA SHARIF, PREM GALI, KASHMERE GATE, NEW DELHI PAN:AAEPJ6163F VS. ITO, WARD - 35(5), (OLD W - 20(2), NEW DELHI (APPELLANT) (RESPONDENT) I TA NO .1284/DEL/2016 (ASSESSMENT YEAR: 2011 - 12 ) DHARAM PAL JAIN L/H AJAY JAIN, 189/8, PUNJA SHARIF, PREM GALI, KASHMERE GATE, NEW DELHI PAN:AAEPJ6163F VS. ITO, WARD - 35(5), (OLD W - 20(2), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. REPUDAMEN THAKUR, CA REVENUE BY: SH. RAVINDER MANI, SR. DR DATE OF HEARING 10/05/ 2016 DATE OF PRONOUNCEMENT 21 / 06 /2016 O R D E R PER PRASHANT MAHARISHI , A . M . 1. TH E PRESENT STAY PETITION AND APPEAL ARE FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT(A) - 32, NEW DELHI DATED 29.12.2015. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN ITA NO.1284/DEL/2016: - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE ACTION OF THE CIT(A) - 32, NEW DELHI, IS ARBITRARY, FALLACIOUS AND ILLEGAL ON THE FOLLOWING GROUNDS AND, THEREFORE, MERITS TO BE QUASHED WITH DIRECTIONS FOR APPROPRIATE RELIEF TO THE ASSESSEE: - 1) THAT CIT (A) ERRED IN CONFIRMING THE ORDER, ONLY BY PROVIDING PARTIAL RELIEF, BEING PASSED BY ASSESSING OFFICER U/S. 143(3) OF THE ACT, AND FAILED TO APPRECIATE THAT: A) SCRUTINY THROUGH CASS, ON THE BASIS OF ' AIR INFORMATION' IS HAVING A LIMITED SCOPE IN VIEW OF C.B.D.T GUIDELINES / INSTRUCTIONS AS REPORTED IN [2006] 157 TAXMAN 1(ST) AS WELL AS C.B.D.T INSTRUCTION VIS - A - VIS AIR SCRUTINY [F.NO.225/26/2006 - ITA.II (PT.)], DATED THE 8TH SEPTEMBER, 2010; PAGE 2 OF 5 B) SUCH SC RUTINY WAS PRETENDED TO BE REGULAR SCRUTINY ASSESSMENT AND HENCE, THE ENTIRE INFORMATIONS/ DOCUMENTARY EVIDENCES, BEING COLLECTED, WERE EITHER IGNORED OR MISUSED; C) THE ISSUE, OF INCONSISTENCY OR CONTRADICTION IN THE RELEVANT PROVISIONS OF THE STATUTE AN D THE INSTRUCTION, IS TO BE DECIDED BY THE COURT AND NOT BY AN INCOME - TAX AUTHORITY U/S. 116 [SAY, CIT(A)], BEING SUBORDINATE TO CBDT; D) WHEN AN INSTRUCTION REMAINS IN OPERATION, THE REVENUE IS BOUND BY IT AND CANNOT BE ALLOWED TO PLEAD THAT IT IS NOT VA LID NOR THAT IT IS CONTRARY TO THE TERMS OF THE STATUTE; HENCE, THE ENTIRE PROCEEDINGS ARE IN VIOLATION OF SEC.119 OF THE INCOME - TAX ACT VIS - A - VIS ARTICLE 141 & 227 OF THE CONSTITUTION AND THEREFORE, VOID AB - INITIO. 2) THAT CIT(A) ERRED IN CONFIRMING THE NON - CONSIDERATION OF REVISED RETURN U/S. 139(5) BY ASSESSING OFFICER AND FAILED TO APPRECIATE THAT: A) THE REPLY FROM CPC, BANGALORE WRONGLY USED THE TERM 'SENT', WHILE AS PER SCREEN SHOT OF E - FILING, THE ACTUAL TERM IS 'RECEIVED'; B) AS PER 'INSTRUCTION FOR SUGAM - 6. MANNER OF FILING THIS RETURN FORM' ONE COPY OF ITR - V, DULY SIGNED BY THE ASSESSEE, HAS TO BE SENT BY ORDINARY POST AND HENCE ITR V WAS SENT BY ORDINARY POST AND THE DELAY IN DELIVERY WAS DUE TO POSTAL AUTHORITIES, FOR WHICH ASSESSEE CANNOT BE PENALIZED; C) SEC. 139(5), BEING SUBSTANTIVE PROVISION, WAS FULLY COMPLIED WITH BY UPLOADING ITR ON 25 - 5 - 2012, WHILE SENDING OF ITR IS MACHINERY / PROCEDURAL PROVISION AND HENCE, NOT TO FORECLOSE EVEN AN ADJUDICATION ON MERITS OF SUBSTANTIAL RIGHTS OF CITIZEN; D) IT IS THE DUTY OF THE OFFICER TO APPRAISE THE ASSESSEE OF HIS RIGHTS PROVIDED UNDER THE ACT AND NOT TO TAKE ADVANTAGE OF THE IGNORANCE OF ASSESSEE. (3) THAT THE CIT(A) ERRED IN GIVING ONLY A PARTIAL RELIEF AND FURTHER FAILED TO APPRECIATE THAT THE ASSESSING OFFICER ERRED : (A) IN CALCULATING AND TREATING THE CASH DEPOSIT OF RS. 77,18,573/ - AS ADDITIONAL SALES ID FURTHER ESTIMATING PROFITS ON SUCH DEPOSITING @ 8% U/S. 44AD AND CONSIDERING SUCH PROFITS (RS.6,17,486/ - ) AS INCOME FROM UNDISCLOSED S OURCES U/S. 68 OF THE INCOME - TAX ACT, 1961; B) IN NOT ACCEPTING TURNOVER OF RS.38,26,075/ - U/S. 44AD; C) IN IGNORING THE STATUTORY PROVISION OF SEC.44AD(5), I.E., EXEMPTION FROM MAINTAINING BOOKS OF ACCOUNT [SEC.44AA(2)(VI)] AND AUDIT [SEC.44AB]; D) IN NOT CONSIDERING THAT IN VIEW OF APPLICABILITY OF SEC.44AD, THE ASSESSES WAS * NOT UNDER OBLIGATION TO EXPLAIN INDIVIDUAL ENTRY OF CASH DEPOSIT IN THE BANK UNLESS SUCH ENTRY HAD NO NEXUS WITH THE GROSS RECEIPTS; E) IN FAILING TO CONSIDER THAT THE REVISE D RETURN SUBSTITUTE THE ORIGINAL RETURN FROM THE DATE OF FILING THE ORIGINAL RETURN FOR THE PURPOSE OF ASSESSMENT; F) IN NOT UNDERSTANDING THE BASIC PRINCIPLE OF TAXATION THAT NEITHER THE RULE OF RES JUDICATA NOR THE RULE OF ESTOPPEL IS APPLICABLE TO AN AS SESSMENT PROCEEDING; HENCE, THE FINDING THAT ALL CREDIT ENTRIES WERE UNDISCLOSED SALE & THOSE AMOUNTS WERE INCOME FROM UNDISCLOSED SOURCES U/S. 68 WAS NOT BASED ON ANY EVIDENCE OR WAS, FOR OTHER REASONS, PERVERSE, BEING IN TOTAL DISREGARD OF PAGE 3 OF 5 FILING OF CASH BOOK, BANK BOOK, SALES BOOK AS WELL AS LEDGERS (BEING PREPARED FROM MEMORANDUM RECORD) AND HENCE, SUCH ADDITION MUST BE DELETED IN TOTO. 4) THAT CIT(A) FAILED TO APPRECIATE THAT THE ASSESSING OFFICER ERRED IN INVOKING TWO DEEMING PROVISIONS [I.E., SEC.44 AD & SEC.68] IN RESPECT OF SAME TRANSACTIONS IN TOTAL DISREGARD OF DOCUMENTARY EVIDENCES [CASH BOOK, BANK BOOK, SALES BOOK AS WELL AS LEDGERS (BEING PREPARED FROM MEMORANDUM RECORD}] BEING PRODUCED BEFORE BOTH AUTHORITIES [I.E., ASSESSING OFFICER & CIT(A)] AND THUS CONVERTING GOOD PROOF INTO NO PROOF. 5 ) THAT CIT(A) FAILED TO APPRECIATE THAT THE ASSESSMENT HAS BEEN COMPLETED U/S. 143(3} AND NOT U/S. 144 BY INVOKING THE PROVISION OF SEC.145(3) OF THE ACT (I.E., BOOKS REJECTION), BEING A PRIMA FACIE EVIDENCE OF GENUINENESS OF THE TRANSACTION. 6) THAT CIT(A) ERRED IN NOT DISMISSING THE GROUND OF INITIATING PENALTY PROCEEDINGS U/S 271 (1)(C) OF THE ACT. 7) THAT CIT(A) ERRED IN NOT DISMISSING THE GROUND OF INITIATING PENALTY PROCEEDINGS U/S 271B OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL CARRYING ON THE PROPRIETARY BUSINESS IN THE NAME OF SUNRISE INDUSTRIES. THE BANKING TRANSACTION S OF THE ASSESSEE ARE CARRIED OUT THROUGH TWO SAVING BANK ACCOUNTS MAINTAINED WITH THE ICICI B ANK. THE ASSESSEE HAS FILED HIS RETURN OF INCOME SHOWING INCOME OF RS. 205823/ - ON 31.07.2011 AND SUBSEQUENTLY, REVISED IT ON 25.02.2012 DECLARING GROSS TOTAL INCOME OF RS. 348553/ - WHEREIN BUSINESS INCOME HAS BEEN REVISED FROM RS. 165483/ - TO RS. 306086/ - . AS THE ASSESSEE COULD NOT SENT THE REVISED RETURN IN TIME TO CPC, BANGALORE THE REVISED RETURN WAS REJECTED. DURING THE YEAR THERE WAS AN AIR INFORMATION, ACCORDING TO WHICH THE ASSESSEE HAS DEPOSITED IN CASH RS. 6664810/ - IN HIS BANK ACCOUNT MAINTAINE D WITH ICICI BANK LTD. FURTHER DURING THE COURSE OF ASSESSMENT PROCEEDINGS LD ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH OTHER BANK ACCOUNTS MAINTAINED AND ON THE BASIS OF THAT IT WAS FOUND THAT IN BANK WITH ORIENTAL BANK OF COMMERCE, THE ASSESSEE HAS FURTHER DEPOSITED IN CASH A SUM OF RS. 2126426/ - . THEREFORE THE CASH SUM DEPOSITED BY THE ASSESSEE WAS TO THE TUNE OF RS. 9 557273/ - . ON ENQUIRY ASSESSEE SUBMITTED THAT THESE ARE HIS BUSINESS RECEIPT FOR WHICH INCOME HAS ALREADY BEEN OFFERED IN THE REVISE D RETURN FILED BY THE ASSESSEE. LD ASSESSING OFFICER DISBELIEVED THE ABOVE CONTENTION BECAUSE AS PER SALES TAX RETURN THE ASSESSEE HAS MADE SALES OF RS. 1176429/ - AND PURCHASES OF RS. 711095/ - . LD AR FURTHER SUBMITTED THAT THE AS THE PROFITS FROM THE BUSIN ESS ARE DECLARED U/S 44AD OF THE INCOME TAX ACT NO BOOKS OF ACCOUNT ARE MAINTAINED BY THE ASSESSEE. IN VIEW OF THIS LD ASSESSING OFFICER CONSIDERED THE AMOUNT OF RS. 7718573/ - AS THE UNACCOUNTED TURNOVER OF PAGE 4 OF 5 THE ASSESSEE DERIVED BY DEDUCTING RS. 1838700/ - A S ACCOUNTED TURNOVER AS PER ORIGINAL RETURN OF INCOME AGAINST SUM OF TOTAL CASH DEPOSITED OF RS. 9557273/ - . ON THE UNACCOUNTED TURNOVER OF RS. 7718573/ - LD AO APPLIED THE PROFIT RATE OF 8% AND MADE AN ADDITION OF RS. 617486/ - U/S 68 OF THE ACT AND DETERMIN ED TOTAL INCOME OF RS. 819580/ - AGAINST RETURN INCOME OF RS. 202095/ - . ASSESSEE PREFERRED APPEAL BEFORE THE LD CIT(A), HOWEVER, THE APPEAL OF THE ASSESSEE WAS REJECTED BUT REDUCED THE PERCENTAGE OF PROFIT FROM 8% TO 5% AND SUSTAINED THE ADDITION OF RS. 385 929/ - . AGAINST THIS THE ASSESSEE IS IN APPEAL BEFORE US. 4. BEFORE US LD AR SUBMITTED THAT THE ASSESSEES CASE HAS BEEN SELECTED THROUGH CASS ON AIR INFORMATION AND ACCORDING TO THE INSTRUCTION DATED 08 TH SEPTEMBER 2010 THE SCOPE OF SCRUTINY SHOULD BE RESTRI CTED TO THE ORIGINAL INFORMATION OF RS. 6664810/ - WHICH WAS STATED BY THE ASSESSING OFFICER. HE SUBMITTED THAT IN CASE THE LD AO WANTED TO INCREASE THE SCOPE OF THE SAME HE MUST HAVE THE APPROVAL OF COMMISSIONER OF INCOME TAX IT AND THEN ONLY IT CAN BE EXT ENDED. HE FURTHER STATED THAT ACCORDING TO THAT INFORMATION POTENTIAL ESCAPEMENT OF INCOME MORE THAN RS. 10 LACS. HE FURTHER SUBMITTED THAT THE CASH BOOK, LEDGER ACCOUNT, BALANCE SHEET AND PROFIT AND LOSS ACCOUNT OF THE ASSESSEE HAS BEEN PREPARED AND ACCOR DING TO THAT THERE IS NO ENTRY IN THE BANK STATEMENT WHICH IS NOT REFLECTED IN THE CASH BOOK. IN VIEW OF THIS HE SUBMITTED THAT THE CASH WAS DEPOSITED OUT OF THE CASH BOOK BALANCE AND IS NOT UNACCOUNTED. HE FURTHER EXPLAINED THE CYCLE OF CASH WHICH IS DEPO SITED IN THE BANK ACCOUNT. 5. LD DR RELIED ON THE ORDER OF THE ASSESSING OFFICER AS WELL AS LD CIT(A). 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS. ACCORDING TO THE ASSESSMENT ORDER SUBMITTED IT IS APPARENT THAT THE ORIGINAL ENQUIRY BASED ON AIR INFORMATION WAS ON ACCOUNT OF CASH DEPOSITED OF RS. 6664810/ - IN THE BANK ACCOUNT WHICH WAS EXTENDED UP TO AN AMOUNT OF RS. 9557213/ - . THE AMOUNT OF ADDITION MADE ON THAT ACCOUNT IS RS. 617486/ - WHICH WAS RESTRICTED BY LD CIT(A) AT RS. 385929/ - . IN VIEW OF THIS THERE WAS NO POTENTIAL ESCAPEMENT OF MORE THAN RS. 10 LACS. IN VIEW OF THIS IN TERMS OF CBDT INSTRUCTION DATED 08 TH SEPTEMBER 2010 LD ASSESSING OFFICER HAS EXCEEDED HIS JURISDICTION BEYOND THE ABOVE INSTRUCTION. THE APPEAL OF THE ASSESSEE SHOULD SUCC EED ON THIS GROUND ONLY IF LD ASSESSING OFFICER HAS NOT RECORDED HIS SATISFACTION ABOUT THE POTENTIAL ESCAPEMENT OF INCOME OF RS. 10 PAGE 5 OF 5 LACS OR MORE AND PRIOR PERMISSION HAS BEEN TAKEN FROM THE ADMINISTRATIVE CIT. THE ABOVE INFORMATION REGARDING SUCH SATISFAC TION AND PERMISSION ARE NOT AVAILABLE BEFORE US. FURTHER, THE ACCOUNT BOOKS SUBMITTED BY THE ASSESSEE BEFORE LD CIT(A) AND BEFORE US WERE NOT BEFORE THE ASSESSING OFFICER. THESE ARE THE NEW EVIDENCES WHICH NEED TO BE CONSIDERED BEFORE DECIDING THE ISSUE OF UNACCOUNTED TURNOVER IN THE CASE OF THE ASSESSEE. LD ASSESSING OFFICER HAD NO OPPORTUNITY OF VERIFYING THE CASH DEPOSITED IN THE BANK ACCOUNTS OF THE ASSESSEE. IN VIEW OF THIS IN THE INTEREST OF JUSTICE THE WHOLE MATTER OF DETERMINATION OF UNACCOUNTED TUR NOVER AS WELL AS THE INSTRUCTION DATED 08 TH SEPTEMBER 2010 IS SET ASIDE TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION TO GRANT PROPER OPPORTUNITY OF HEARING AND THEN DECIDE THE MATTER AFRESH. 7. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED F OR STATISTICAL PURPOSES AND AS THE APPEAL OF THE ASSESSEE HAS BEEN DISPOSED OFF BY THIS ORDER THE STAY PETITION NO. 175/DEL/2016 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 1 / 06 /2016 . - S D / - - S D / - ( I.C.SUDHIR ) (PR ASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 1 / 06 / 2016 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI