Shri Pravinchandra Ishwarlal Rana, Surat V. The Income Tax Officer, Ward-2(3), ( Now Ward-1(2)(4)), Surat

ITA 133/AHD/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 2169 (ITAT-SURAT)
• Duration Of Justice: 2 year(s) 7 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 19-01-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANIL DHAKA
• Assessee Lawyers: P M JAGASHETH
• Section: 44AD

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH SMC, SURAT , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER . / ITA NO.133/AHD/2016/SRT / ASSESSMENT YEAR: 2008-09 PRAVINCHANDRA ISHWARLAL RANA, 14/782, HALPATI COLONY, OPP: RANA KEROSIN DEPOT, MAHALAXMI SHERI NO.2, UMARWADA, RUING ROAD, SURAT 395 002. [PAN: ABEPR 9239F] VS. INCOME TAX OFFICER, WARD-2(3), SURAT. NEW JURISDICTION INCOME TAX OFFICER, WARD-1(2)(4), SURAT. ( / APPELLANT) ( ! /RESPONDENT) / ASSESSEE BY : SHRI P.M. JAGASHETH, C.A /REVENUE BY : SHRI ANIL DHAKA, SR. D.R /DATE OF HEARING : 17-09-2018 / DATE OF PRONOUNCEMENT : 18-09-2018 / ORDER PER C.M.GARG, JUDICIAL MEMBER: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-II, SURAT (CI T(A) FOR SHORT) DATED 03.12.2015 FOR THE ASSESSMENT YEAR (A.Y) 2008-09. 2. THE LD. ASSESSEES REPRESENTATIVE (AR) SUBMITTED THAT THE ASSESSEE DOES NOT WANT TO PRESS GROUND NO.1, HENCE, THE SAME IS 2 ITA NO.133/AHD/2016/SRT (A.Y: 2008-09) SHRI PRAVINCHANDRA ISHWARLAL RANA DISMISSED AS NOT PRESSED. THE REMAINING SOLE GROUND RAISED BY THE ASSESSEE READS AS FOLLOWS: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFF ICER IN MAKING ADDITION OF RS. 18,37,895/- ON ACCOUNT OF ALLEGED U NEXPLAINED CASH DEPOSITED IN SAVINGS BANK ACCOUNT. 3. WE HAVE HEARD THE ARGUMENTS OF BOTH SIDES AND CA REFULLY PERUSED THE RELEVANT MATERIAL PLACED ON THE RECORD OF THE T RIBUNAL. THE LD. AR SUBMITTED THAT THE LEARNED COMMISSIONER OF INCOME T AX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFF ICER IN MAKING ADDITION OF RS. 18,37,895/- ON ACCOUNT OF ALLEGED UNEXPLAINE D CASH DEPOSITED IN SAVINGS BANK ACCOUNT. HE FURTHER SUBMITTED THAT TH E ASSESSEE IS IN THE BUSINESS OF JARI WHICH IS SOLD IN THE SOUTH INDIAN AREAS AND SALE PROCEED IS DEPOSITED BY THE RESPECTIVE PURCHASERS IN THE BR ANCH OF THEIR LOCALITY AND ASSESSEE WITHDRAW THE SAME WHICH IS FURTHER USE D FOR MAKING PAYMENT TO THE SUPPLIERS OF THE GOODS WHICH WAS SOL D TO THE PURCHASERS LOCATED IN THE SOUTH INDIA. THE LD. AR SUBMITTED TH AT SINCE THE ASSESSEE UNDERTOOK TURNOVER OF RS. 18,37,895/- DURING THE EN TIRE RELEVANT PERIOD WHICH WAS RECEIVED BY WAY OF DEPOSIT BY THE PURCHAS ERS TO THE BANK ACCOUNT OF THE ASSESSEE AND THE INCOME OF THE ASSE SSEE WAS BELOW TAX LIMIT THEREFORE, THE ASSESSEE WAS NOT FILING RETURN OF INCOME. THE LD. AR VEHEMENTLY POINTED OUT THAT THE ENTIRE SALE RECEIPT S CANNOT BE TAKEN AS INCOME IN THE HANDS OF THE ASSESSEE MAXIMUM PEAK DE POSIT AMOUNT MAY 3 ITA NO.133/AHD/2016/SRT (A.Y: 2008-09) SHRI PRAVINCHANDRA ISHWARLAL RANA BE ADDED AND TAKEN AS INCOME OF THE ASSESSEE FOR IM POSING TAX ON THE ASSESSEE. THE LD. AR ALSO SUBMITTED THAT EVEN IF A S PER PROVISIONS OF S. 44AD, THE NP RATE OF MAXIMUM 8% MAY BE APPLIED ON T HE IMPUGNED TURNOVER OF THE ASSESSEE FOR ASSESSING INCOME BUT N OT THE ENTIRE AMOUNT WHICH WAS SALE PROCEED RECEIVED FROM THE RESPECTIVE BUYERS THROUGH BANK ACCOUNT OF THE ASSESSEE. 4. REPLYING TO THE ABOVE, THE LD. DEPARTMENTAL REP RESENTATIVE (DR) SUBMITTED THAT THE AO WAS RIGHT IN MAKING ADDITION, WHICH WAS RIGHTLY CONFIRMED BY THE LD. CIT(A) HENCE, NO INTERFERENCE IS REQUIRED IN THE ORDERS OF THE AUTHORITIES BELOW. 5. ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMISSI ONS, THE LD. AO AS WELL AS THE LD. CIT(A) HAS NOT DISPUTED THE FACT TH AT THE ASSESSEE IS IN THE JARI SALE BUSINESS AND HE IS SELLING GOODS TO THE P URCHASERS LOCATED IN THE SOUTH INDIA AND EXCEPT AMOUNT DEPOSITED TO HIS BANK ACCOUNT NO OTHER TRANSACTION HAVE BEEN TRACED OR BROUGHT ON RECORD. IN THIS SITUATION, WE ARE IN AGREEMENT WITH THE CONTENTION OF THE LD. AR THAT THIS AMOUNT WAS RECEIVED THROUGH BANK ACCOUNT FROM THE PURCHASERS L OCATED IN THE SOUTH INDIA AND THIS AMOUNT IS SALE PROCEED OF SALE OF JA RI, WHICH WAS USED FURTHER FOR MAKING PAYMENT TO THE SUPPLIERS OF GOOD S WHICH WAS SOLD BY THE ASSESSEE IN SOUTH INDIA. DEFINITELY ASSESSEE B ELONGS TO A CATEGORY OF TRADER WHICH FALLS WITHIN THE AMBIT OF PROVISION OF S. 44AD OF THE ACT 4 ITA NO.133/AHD/2016/SRT (A.Y: 2008-09) SHRI PRAVINCHANDRA ISHWARLAL RANA HAVING TURNOVER OF LESS THAN RS. 40,00,000/-. AS P ER PROVISION OF S. 44AD OF THE ACT, 8% OF TURNOVER OR GROSS RECEIPTS OF THE ASSESSEE IN THE PREVIOUS YEARS ON ACCOUNT OF SUCH BUSINESS SHALL BE DEEMED TO BE THE PROFITS AND GAINS OF SUCH BUSINESS CHARGEABLE TO TA X UNDER THE HEAD PROFIT AND GAINS OF BUSINESS OR PROFESSION. FROM THE COPY OF BANK ACCOUNT, IT IS DISCERNABLE THAT THE ASSESSEE HAS WI THDREW AND DEPOSITED VERY SMALL AMOUNTS AND THE PEAK WAS RS. 34,623/- AS ON 18.03.2008, BUT THE SAME CANNOT BE TREATED AS THE ONLY INCOME EARN ED FROM THE JARI BUSINESS OF THE ASSESSEE. HOWEVER, KEEPING IN VIEW THE PROVISION OF S. 44AD OF THE ACT AND AMOUNT OF TURNOVER UNDERTAKEN B Y THE ASSESSEE DURING THE RELEVANT PERIOD, WE ARE OF THE CONSIDERE D OPINION THAT THE ENTIRE AMOUNT DEPOSITED TO THE BANK ACCOUNT OF THE ASSESSE E BY THE RESPECTIVE PURCHASERS CANNOT BE TREATED AS INCOME OF THE ASSES SEE ONLY PROFIT ELEMENT THEREIN CAN BE TREATED AS INCOME OF THE ASS ESSEE FROM JARI BUSINESS. THEREFORE, IN OUR CONSIDERED OPINION, TH E ALL POSSIBLE LEAKAGE OF REVENUE WOULD BE COVERED IF, THE PROFIT/INCOME E ARNED FROM THE JARI BUSINESS IS ESTIMATED @ 10% OF TOTAL TURNOVER OF TH E ASSESSEE AND WE DIRECT THE AO TO CALCULATE THE INCOME OF THE ASSESS EE ACCORDINGLY. 6. FROM THE COPY OF BANK STATEMENT, WE OBSERVE THAT ON 31.03.2007 THERE WAS BALANCE OF RS. 401/- ONLY WHICH WAS BROUG HT FORWARD TO THE PRESENT FINANCIAL YEAR AND THEREAFTER, ON 05.04.200 7, THE AMOUNT OF RS. 5 ITA NO.133/AHD/2016/SRT (A.Y: 2008-09) SHRI PRAVINCHANDRA ISHWARLAL RANA 20,000/- WAS DEPOSITED AND THEREAFTER, BALANCE REAC HED TO RS. 20,401/-. HENCE, WE OBSERVE THAT THERE WAS A VERY MEAGER AMOU NT OF RS. 401/- IN THE BEGINNING OF FINANCIAL YEAR AND HENCE, THE PEAK OF RS. 34,623/- AS ON 18.03.2008 IS ALSO BE TREATED AS AN AMOUNT OF UNDIS CLOSED INVESTMENT OF THE ASSESSEE FOR CONDUCTING JARI BUSINESS AS NO BUS INESS CAN BE DONE WITHOUT ANY CAPITAL. THEREFORE, AO IS ALSO DIRECTE D TO MAKE ADDITION OF PEAK AMOUNT TO THE INCOME OF THE ASSESSEE. ACCORDI NGLY, REMAINING SOLE GROUND OF THE ASSESSEE IS PARTLY ALLOWED AND AO IS DIRECTED TO RE-COMPUTE THE TAXABLE INCOME OF THE ASSESSEE AS DIRECTED ABOV E. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 1 8 TH SEPTEMBER, 2018. / SURAT; DATED : 18 TH SEPTEMBER, 2018 EDN # / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT ; 3. $ ( ) / THE CONCERNED CIT(A); 4. THE CONCERNED PRL. CIT; 5. , , , / DR, ITAT, SURAT; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // * / ASSISTANT REGISTRAR , / ITAT, SURAT SD/- ( ) (C.M.GARG) /JUDICIAL MEMBER