The ITO,Patan Ward-3, Mehsana V. Shri Bhogilal M.Patel, Visnagar

ITA 135/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73040 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2002-2003
• Appeal Filed On: 19-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P JHANGID
• Keywords: Business income; Income from undisclosed sources
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) I.T. A. NO. 135 /AHD/2011 (ASSESSMENT YEAR: 2002-03) ITO, PATAN WARD-3, MEHSANA V/S SHRI BHOGILAL M. PATEL, 20/1, MOHANNAGAR SOCIETY, M.N. COLLEGE ROAD, VISNAGAR. (APPELLANT) (RESPONDENT) PAN: ABNPP 8771D APPELLANT BY : SHRI J.P. JHANGID, SR. D.R . RESPONDENT BY : SHRI ANIL KSHATRIYA ( )/ ORDER DATE OF HEARING : 19-02-201 4 DATE OF PRONOUNCEMENT : 07 -03-2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A)- GANDHINAGAR, AHMEDABAD DATED 01.11.2010 FOR A.Y. 2002-03. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI AL ON RECORD ARE AS UNDER. 3. ASSESSEE IS AN INDIVIDUAL WHO HAS SHOWN BROKERAG E INCOME IN A.Y. 02-03. ASSESSEE FILED HIS RETURN OF INCOME FOR A.Y. 2002-0 3 ON 31.03.2004 DECLARING TOTAL INCOME AT RS. 1,20,020/-. THE RETURN WAS INI TIALLY PROCESSED UNDER SECTION 143(1) OF THE ACT. LATER ON THE ASSESSMENT OF THE ASSESSEE WAS REOPENED BY ISSUING NOTICE UNDER SECTION 148 ON 16. 03.2009 AND THEREAFTER ITA NO 135/AHD/2011 . A.Y. 2002- 03 2 THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) R.W. S. 147 VIDE ORDER DATED 10.12.2009 AND THE TOTAL INCOME WAS DETERMINED AT R S. 12,89,340/-. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED TH E MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 01.11.2010 GRANTED SUBSTANT IAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE AFORESAID ORDER OF CIT( A), THE REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUN D:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN RESTRICTING THE ADDITION MADE ON ACCOUNT OF INCOME FROM UNDISCLOSED SOURCES FROM RS. 11,69,316/- TO RS . 39,272/- THEREBY DELETING THE ADDITION BY AN AMOUNT OF RS. 11,30,044/-. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O . NOTICED THAT ASSESSEE HAS INTRODUCED CAPITAL OF RS. 13,10,000/- IN SAMIR FINANCE AS CAPITAL. THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF CAPITAL . FROM THE COPY OF THE LEDGER ACCOUNT, A.O. NOTICED THAT HAD SHOWN SUBSTAN TIAL CASH DEPOSITS. A.O. ALSO NOTED THAT ASSESSEE HAD SHOWN AGRICULTURE INCO ME OF RS. 1,47,303/- AGAINST WHICH SUPPORTING BILLS FOR 1,29,403/- WERE FILED. A.O THEREFORE CONSIDERED 60% OF THE NET INCOME AS REASONABLE AFTE R CONSIDERING THE EXPENSES AT 40% WORKED OUT THE NET AGRICULTURE INCO ME OF RS. 77,640/- FOR THE YEAR UNDER CONSIDERATION. HE AFTER CONSIDERING THE BUSINESS INCOME, THE AGRICULTURE INCOME, INCOME FROM PARTNERSHIP FIRM AN D RECEIPTS FROM INSURANCE CLAIM, WORKED AT SURPLUS AMOUNTING TO RS. 1,40,684/ - AS AGAINST WHICH THE ASSESSEE HAD SHOWN CAPITAL INTRODUCTION OF RS. 13,1 0,000/-. HE THEREFORE CONSIDERED THE BALANCE AMOUNT OF RS. 11,69,316/- (R S. 13,10,000 LESS RS. 40,684) TO BE INCOME FROM UNDISCLOSED SOURCE AND AC CORDINGLY ADDED TO THE INCOME OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF A .O, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE GRANTED SUBSTANTIAL RELIEF BY HOLDING AS U NDER:- 4.3 I HAVE GONE THROUGH THE FACTS OF THE CASE, THE ASSE SSMENT ORDER AND THE SUBMISSIONS OF THE ASSESSEE. THE FACTS OF THE CASE ARE THAT THE ASSESS EE IS A PARTNER IN M/S SAMIR FINANCE AND HAS INTRODUCED CAPITAL IN THE FIRM, WHICH WAS REFLECTED IN TWO ACCOUNTS NAMELY FIXED CAPITAL ACCOUNT AND CURRENT CAPITAL ACCOUNT. ALSO, THE ASSESSEE WA S MAINTAINING CASH BOOK AND LEDGER IN HIS PERSONAL CAPACITY WHICH HE PRODUCED BEFORE THE ASSE SSING OFFICER. IT IS NOT DISPUTED THAT THE TRANSACTIONS ARE REFLECTED IN THESE BOOKS. ALL THE CASH INTRODUCED IS THROUGH THESE CASH BOOK AND LEDGER ONLY. THE CAPITAL IN THE FIRM WAS FORMED BY OPENING BALANCE, INTEREST ON CAPITAL, REMUNERATION FROM THE FIRM, SHARE OF PROFITS DURING THE YEAR BESIDES CASH INTRODUCED THROUGH ITA NO 135/AHD/2011 . A.Y. 2002- 03 3 PERSONAL CASH BOOK. OPENING BALANCE, INTEREST ON C APITAL, REMUNERATION FROM THE FIRM, SHARE OF PROFITS DURING THE YEAR ARE NOT DISPUTED AND HAD BE EN ACCEPTED BY THE ASSESSING OFFICER. THE SOURCE OF CASH RECEIPTS IN THE CASH BOOK WHICH WERE PRODUCED BEFORE THE UNDERSIGNED AND THE ASSESSING OFFICER WERE BROADLY A) AGRICULTURAL INCOME CLAIMED OF RS.116912, WHEREAS T HE ASSESSING OFFICER ACCEPTED THE ACTUAL AGRICULTURAL (INCOME TO BE RS.77,640 ONLY B) CASH RECEIVED FROM PERSONS WHICH WERE SHOWN AS DEBT ORS (INDIRECT SOURCE DEPOSITORS) OF THE EARLIER YEAR. AS FAR AS B) ABOVE IS CONCERNED, THE BOOKS WERE PRO DUCED BEFORE THE ASSESSING OFFICER AND IT WAS ASSERTED BEFORE HIM THAT NO DEPOSIT IS ACCEPTED DUR ING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2002-03 [PARA 4. PAGE 3 (NOT NUMBERED) OF ASSESSMENT ORDER] . NO ADVERSE COMMENT HAS BEEN MADE ACCEPT THAT THE DETAILS HAVE NOT BEEN PRO DUCED. WHAT DETAILS WERE REQUIRED HAS -NOT AT ALL BEEN SPELT OUT. IN THE CIRCUMSTANCES, WHERE THE SOURCE WAS CLEARLY THE DEPOSITS IN EARLIER YEAR REFLECTED IN THE BALANCE SHEET OF THAT YEAR FILED ' WITH THE INCOME TAX RETURN OF ASSESSMENT YEAR 2001-02 AND THIS FACT WAS NOT ONLY CLEAR FROM THE C ASH BOOKS PRODUCED BUT ALSO ASSERTED BEFORE HIM; THE ADDITION MADE BY THE ASSESSING OFFICER ON THE BASIS WITHOUT PROVING THE BOOKS TO BE BOGUS AND FICTITIOUS IS NOT JUSTIFIED. THE ADDITION MADE ON THIS BASIS IS DELETED SUBJECT TO THE COMMENTS BELOW. AS FAR AS AGRICULTURAL INCOME IS CONCERNED I'VE GON E THROUGH THE FACTS OF THE CASE. THE ASSESSEE HAS CLAIMED INCOME FROM SALE OF YELLOW GRASS FOR WH ICH IT CLAIMS THAT NO BILLS COULD BE PRODUCED BECAUSE OF ITS VERY NATURE. HOWEVER, EVEN OTHERWISE THE SALE OF YELLOW GRASS OF AROUND 18,000 RUPEES WITHIN TWO MONTHS SEEMS TOO FARFETCHED AND C ANNOT BE ACCEPTED. FURTHER, THE EXPENSES SHOWN ON AGRICULTURAL ACTIVITIES ARE ALSO VERY LOW. I AGREE WITH THE ESTIMATE OF AGRICULTURAL INCOME MADE BY THE ASSESSING OFFICER TO BE RS.77,640 ONLY. THEREFORE, THE SOURCE OF CAPITAL INTRODUCTION IN THE FIRM IS HELD TO BE UNEXPLAINED TO THE EXTENT OF 39,272/-(RS. 116912 - RS.77640). THEREFORE AS A RESULT ADDITION OF RS.39,272/ IS SUSTAINED AND THE REST IS DELETED. 5. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE IS NOW IN APPEAL BEFORE US. 6. BEFORE US, REVENUE RELIED ON THE ORDER OF A.O. O N THE OTHER HAND LD. A.R. SUPPORTED THE ORDER OF CIT(A) AND FURTHER SUBMITTED THAT THE CASH RECEIPT WERE FROM PERSON WHO WERE SHOWN AS DEBTORS IN EARLI ER YEARS. HE FURTHER SUBMITTED THAT THE AFORESAID AMOUNT WAS DISCLOSED I N THE BALANCE SHEET OF ASSESSEE AND IN THE COMPUTATION OF INCOME FILED FOR A.Y. 01-02. HE PLACED ON RECORD, THE COPY OF THE ACKNOWLEDGED COPY OF RET URN AT PAGE 10 OF THE PAPER BOOK. HE THUS SUPPORTED THE ORDER OF CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT CIT(A) WHILE DELETING THE ADDITION HAS GIVEN A FINDING THAT THE ASSESSEE HAD INTRODUCED CAPITAL IN THE FIRM WHICH W AS REFLECTED IN 2 ACCOUNTS NAMELY FIXED CAPITAL ACCOUNT AND CURRENT CAPITAL AC COUNT AND THE SAME WERE REFLECTED IN THE BOOKS OF ACCOUNTS. HE HAS FUR THER GIVEN A FINDING THAT WHEN THE SOURCE OF DEPOSITS WAS FROM EARLIER YEARS WHICH WERE REFLECTED IN ITA NO 135/AHD/2011 . A.Y. 2002- 03 4 THE BALANCE SHEET FILED ALONG WITH THE RETURN OF IN COME FOR A.Y. 01-02, THE ADDITION MADE WITHOUT PROVING THE BOOKS TO BE BOGUS AND FICTITIOUS WAS NOT JUSTIFIED. CIT(A) HAS FURTHER GIVEN A FINDING THAT OPENING BALANCE, INTEREST ON CAPITAL, REMUNERATION FROM FIRM AND SHARE OF PROFIT HAS BEEN ACCEPTED BY THE A.O. 8. BEFORE US, THE REVENUE HAS NOT BROUGHT ANY MATER IAL ON RECORD TO CONTROVERT THE FINDINGS OF CIT(A). IN VIEW OF THE AFORESAID FA CTS, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT(A) AND THUS THIS GR OUND OF REVENUE IS DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN OPEN COURT ON 07 - 03 - 2014. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AH MEDABAD