Shri Kalpesh K.Desai, Ahmedabad V. The Income tax Officer,Ward-6(3), Ahmedabad

ITA 1461/AHD/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9518 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 03-12-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 23-05-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VILAS V SHINDE
• Assessee Lawyers: P M MEHTA; G M THAKOR ARS
• Keywords: Unexplained investment; Peak credit; Corroborative evidences
• Section: 69

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD - , , BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ I.T.A. NO.1461/AHD/2011 ( / ASSESSMENT YEAR : 2006-07) SHRI KALPESH K.DESAI 21, HARINAGAR SOCIETY BAVLA ROAD, SANAND DIST AHMEDABAD-382 110 / VS. THE ITO WARD-6(3) AHMEDABAD # ./ ./ PAN/GIR NO. : AFHPD 8313 H ( #% / APPELLANT ) .. ( &'#% / RESPONDENT ) #% ( / APPELLANT BY : SHRI P.M.MEHTA & SHRI G.M. THAKOR, ARS &'#% ) ( / RESPONDENT BY : SHRI VILAS V.SHINDE, DR * + ) ,- / DATE OF HEARING 03/12/2015 ./ ) ,- / DATE OF PRONOUNCEMENT 12/02/2016 / O R D E R PER SHRI RAJPAL YADAV, JUDICIAL MEMBER : ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORDER OF LD.COMMISSIONER OF INCOME TAX(APPEALS)-XI, AHMEDABA D [CIT(A) IN SHORT] PASSED FOR ASSESSMENT YEAR (AY) 2006-07. 2. GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE NOT IN CONSONANCE WITH RULE NO.8 OF THE ITAT RULES, 1963, THEY ARE DESCRIP TIVE AND ITA NO.1461 /AH D/2011 SHRI KALPESH K.DESAI, AHMEDABAD VS. ITO ASST.YEAR 2006-07 - 2 - ARGUMENTATIVE IN NATURE. IN BRIEF, THE ASSESSEE I S AGGRIEVED WITH REGARD TO CONFIRMATION OF THREE ADDITIONS; NAMELY, RS.54,0 83/-, RS.6,01,023/- & RS.45,000/-. THE ASSESSMENT ORDER IS A VERY BRIEF ASSESSMENT ORDER RUNNING INTO 2 PAGES ONLY. THE DISCUSSIONS MADE B Y THE ASSESSING OFFICER (AO IN SHORT) ON THESE ISSUES ARE CONTAINED IN PARA-3 WHICH READ AS UNDER:- A) ON VERIFICATION OF THE TDS CERTIFICATES FILED BY THE ASSESSEE ALONG WITH THE RETURN OF INCOME, IT WAS FOUND THAT THE AS SESSEE HAS RECEIVED TOTAL COMMISSION OF RS.8,03,427 DURING THE YEAR. ON VERIFICATION OF THE PROFIT AND LOSS ACCOUNT, IT IS SEEN THAT THE ASSESS EE HAS ACCOUNTED FOR A COMMISSION OF ONLY RS.7,49,344. IT IS THEREFORE, EV IDENT THAT THE ASSESSEE HAS NOT SHOWN THE ENTIRE COMMISSION RECEIVED DURING THE YEAR AS INCOME. IN VIEW OF THIS FINDING, THE DIFFERENCE IN COMMISSION RECEIVED AS PER TDS CERTIFICATE AND AS CREDITED IN PROFIT AND L OSS ACCOUNT I.E. RS.54,083 IS ADDED TO THE TOTAL INCOME. (ADDITION RS. 54,083) B) ON VERIFICATION OF THE BANK STATEMENT FROM DENA BANK A/C. 11821, IT IS OBSERVED THAT THE ASSESSEE HAS DEPOSITED CASH DU RING THE YEAR. DESPITE SEVERAL OPPORTUNITIES THE ASSESSEE HAS NOT GIVEN ANY EXPLANATION REGARDING SOURCE OF OF SUCH CASH DEPOSI TS. AS THE ONUS OF FURNISHING THE SOURCE OF INVESTMENT TO THE SATISFAC TION OF THE A.O. IS ON THE ASSESSEE, THE ASSESSEE HAS FAILED ON THIS COUNT . IN VIEW OF THESE FACTS, THE FOLLOWING CASH DEPOSITS MADE BY THE ASSESSEE AR E CONSIDERED AS UNEXPLAINED INVESTMENT U/S. 69 OF THE ACT AND ADDED TO THE TOTAL INCOME. HOWEVER, IT IS SEEN THAT THE ASSESSEE HAS ALSO WITH DRAWN CASH DURING THE YEAR AND THEREFORE, PEAK BALANCE IS CONSIDERED AS UNEXPLAINED INVESTMENT. THE PEAK BALANCE COMES TO RS.6,01,023 O N 13/04/2005. ACCORDINGLY, RS.6,01,023 IS ADDED TO THE TOTAL INCOME AS UNEXPLAINED INVESTMENT. PENALTY PROCEEDINGS U/S. 271 (1 )(C) AR E SEPARATELY INITIATED. (ADDITION RS.6,01,023) ITA NO.1461 /AH D/2011 SHRI KALPESH K.DESAI, AHMEDABAD VS. ITO ASST.YEAR 2006-07 - 3 - C) THE ASSESSEE HAS CLAIMED SALARY EXPENSES OF RS.4 ,50,000. DESPITE SEVERAL OPPORTUNITIES, THE ASSESSEE HAS NOT FURNISH ED ANY SUPPORTING EVIDENCE OF HAVING PAID SUCH SALARY. IN ABSENCE OF PRIMARY RECORDS, THE GENUINENESS OF THIS EXPENSE CAN NOT BE VERIFIED. IN VIEW OF THIS SITUATION 10% OF SALARY EXPENSES ARE CONSIDERED AS UNEXPLAINE D AND DISALLOWED. ACCORDINGLY AN AMOUNT OF RS.45,000 IS ADDED TO THE TOTAL INCOME. (ADDITION RS. 45,000) 3. APPEAL TO THE LD.CIT(A) DID NOT GRANT ANY RELIEF TO THE ASSESSEE. 4. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE CONTE NTED THAT AS FAR AS ADDITION OF RS.54,083/- IS CONCERNED, THE ASSESSEE HAS ACCOUNTED THE RECEIPTS ON CASH BASIS, I.E. THE AMOUNTS WHICH HAVE BEEN CREDITED IN THE BANK ACCOUNT OF THE ASSESSEE ARE ONLY RECOGNIZED DU RING THIS YEAR. HE FURTHER CONTENDED THAT THE AO DID NOT GRANT ANY OPP ORTUNITY TO THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDING S AND DID NOT VERIFY THE BANK STATEMENTS SUBMITTED TO HIM. 4.1. ON THE OTHER HAND, THE LD.DR WAS UNABLE TO CON TROVERT THIS CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE. 5. ON DUE CONSIDERATION OF THE FACTUAL CIRCUMSTANCE S, WE FIND THAT THE ASSESSEE HAS PLACED ON RECORD THE COPY OF THE BANK STATEMENT WITH HDFC BANK ON PAGE NOS.42 TO 45 OF THE PAPER-BOOK. ON TH E STRENGTH OF THIS BANK STATEMENT, IT HAS BEEN DEMONSTRATED BY THE ASS ESSEE THAT COMMISSION INCOME HAS BEEN ACCOUNTED ON CASH BASIS. THEREFORE, THERE ITA NO.1461 /AH D/2011 SHRI KALPESH K.DESAI, AHMEDABAD VS. ITO ASST.YEAR 2006-07 - 4 - WAS A VARIATION IN THE TDS CERTIFICATE VIS-A-VIS CO MMISSION INCOME ACTUALLY RECEIVED BY THE ASSESSEE. THE AO WAS NOT JUSTIFIED IN MAKING ADDITION WITHOUT CONSIDERING THIS ASPECT. THEREFOR E, WE ALLOW GROUND NOS.2.1 & 2.2 OF THE APPEAL AND DELETE THE ADDITION OF RS.54,083/-. 6. AS FAR AS SECOND ISSUE IS CONCERNED, THE CASE OF THE ASSESSEE IS THAT A SUM OF RS.6,01,023/- HAS BEEN ADDED BY THE AO WIT H THE AID OF SECTION 69 OF THE I.T.ACT, 1961 ON THE GROUND THAT THE ASSE SSEE FAILED TO EXPLAIN THE SOURCE OF CASH DEPOSIT IN THE BANK ACCOUNT BEAR ING NO.11821 WITH DENA BANK. 7. ON APPEAL, THE LD.CIT(A) HAS PARTLY DELETED THE ADDITION. THE LD.CIT(A) CONFIRMED THE ADDITION TO THE EXTENT OF R S.3,57,023/-. IN ORDER TO EXPLAIN THE SOURCE, THE ASSESSEE HAS CONTENDED T HAT HE WAS HAVING AGENCY BUSINESS OF M/S.ANKUR SEEDS CO., NAGPUR FRO M WHICH HE DERIVES REGULAR AGRICULTURAL INCOME FROM YEAR-TO-YEAR BASIS . THE ASSESSEE HAS SUBMITTED THE DETAILS OF CASH WITHDRAWALS FROM FINA NCIAL YEARS (FYS) 2000-01 TO 2004-05. THE TOTAL WITHDRAWALS HAVE BEE N MADE AT RS.32,58,500/-. HE HAS INCURRED EXPENDITURE OF RS. 16,81,455/- AND DEPOSITED IN THE BANK A SUM OF RS.5,60,000/-. IN F YS 2001-02 & 2002- 03, THE ASSESSEE DID NOT DEPOSIT ANY AMOUNT IN THE BANK, REST OF THE FUNDS WERE AVAILABLE WITH THE ASSESSEE IN CASH. ACCORDIN G TO THE ASSESSEE, HE WAS HAVING A SOURCE OF RS.10,18,045/-. ACCORDING T O THE ASSESSEE, THE ITA NO.1461 /AH D/2011 SHRI KALPESH K.DESAI, AHMEDABAD VS. ITO ASST.YEAR 2006-07 - 5 - LD.AO FAILED TO EXAMINE THIS ASPECT AND HAS ERRED IN MAKING THE ADDITION. 7.1. ON THE OTHER HAND, LD.DR RELIED UPON THE ORDER OF THE LD.CIT(A). 8. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. WE FIND THAT, BEFORE THE LD. CIT(A), THE ASSESSEE HAS DEMONSTRATED OWNERSHIP OF AGRICULTURAL LAND HAVING 25.66 HECTARES. HE HAS FILED CERTIFICATES IN FORM NO.7/12. HE HAS ALS O DEMONSTRATED THAT IN THE PAST WITHDRAWALS HAVE BEEN MADE FROM THE BANK W HICH WERE KEPT IN CASH. THE LD.CIT(A) AFTER LOOKING TO THE PATTERN O F DEPOSITS IN THE BANK ACCOUNT AS WELL AS ALLEGED AGRICULTURAL HOLDINGS, D ELETED THE ADDITION OF RS.2,44,000/-. ON AN ANALYSIS OF THESE DETAILS, W E FIND THAT THERE IS NO DIRECT EVIDENCE WITH THE ASSESSEE, HIS CASE IS BAS ED ON CIRCUMSTANTIAL EVIDENCES. ACCORDING TO THE ASSESSEE, IF WITH THE ANGLE OF HUMAN PROBABILITIES THE FACTS ARE LOOKED INTO THAT A PERS ON HOLDING AGRICULTURAL LAND OF 63.38 ACRES COULD EASILY GENERATE AN INCOME OF RS.3.44 LACS WHICH WAS TREATED BY THE LD.CIT(A) AS UNEXPLAINED O NE. THIS GENERATION OF INCOME FURTHER FOUND CORROBORATION FROM THE AGEN CY BUSINESS OF AGRICULTURAL SEEDS. THE ASSESSEE HAS WITHDRAWN A S UM MORE THAN RS.32 LACS IN THE LAST SIX FINANCIAL YEARS. THE DE POSITS IN THE BANK IS ONLY RS.5,60,000/- OUT OF WITHDRAWALS. THUS, POSSIBILIT Y OF HAVING A SUM OF RS.6 LACS IN CASH WITH THE ASSESSEE CANNOT BE RULED OUT. THE LD.REVENUE AUTHORITIES OUGHT TO HAVE LOOKED INTO THE FACTS WI TH THIS ANGLE. ITA NO.1461 /AH D/2011 SHRI KALPESH K.DESAI, AHMEDABAD VS. ITO ASST.YEAR 2006-07 - 6 - THEREFORE, WE ALLOW SECOND GROUND OF APPEAL AND ALS O DELETE THE ADDITION OF RS.3,57,023/-. 9. THE NEXT ISSUE RELATES TO DISALLOWANCE OF RS.45, 000/-. THE ASSESSEE HAS CLAIMED SALARY EXPENSES OF RS.4,50,000 /-, HE FAILED TO SUBMIT THE SUPPORTING EVIDENCE. THEREFORE, THE AO MADE AN ADHOC DISALLOWANCE AT 10% OF THE TOTAL EXPENDITURE. 10. AFTER LOOKING TO THE FINDING OF THE LD.REVENUE AUTHORITIES AND GOING THROUGH THE CONTENTIONS OF THE LD.COUNSEL FOR THE ASSESSEE, WE DO NOT FIND ANY ERROR IN THE ORDERS OF THE LD.REVENUE AUTHORITIES BECAUSE ASSESSEE FAILED TO SUBSTANTIATE HIS CLAIM FOR EXPEN DITURE AND SUPPORTING EVIDENCE. THEREFORE, THIS GROUND OF APPEAL IS REJ ECTED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH FEBRUARY, 2016 AT AHMEDABAD SD/- SD/- ( ) ( ) ( MANISH BORAD ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 12/ 02 /2016 3-.., .../ T.C. NAIR, SR. PS ITA NO.1461 /AH D/2011 SHRI KALPESH K.DESAI, AHMEDABAD VS. ITO ASST.YEAR 2006-07 - 7 - !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. #% / THE APPELLANT 2. &'#% / THE RESPONDENT. 3. 45, * 6, / CONCERNED CIT 4. * 6, ( ) / THE CIT(A)-XI, AHMEDABAD 5. 789 &,45 , - 45/ , / DR, ITAT, AHMEDABAD 6. 9;< =+ / GUARD FILE. / BY ORDER, '7, &, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 11.2.16 (DICTATION-PAD 14 +PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ..11.2.16 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.12.2.16 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 12.2.16 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER