Sri Naresh Kumar Sharma, Kolkata V. ITO, Ward - 48(3), Kolkata, Kolkata

ITA 1486/KOL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1165 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 21-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOWDHURY
• Assessee Lawyers: JITENDRA KAUSHIK
• Keywords: Unexplained investment; Depreciation; Principle of natural justice; Source of fund; Additional evidence; Cost of acquisition
• Section: 44AD; 143(3); 69; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH (SMC), KOLKATA [BEFORE HONBLE SHRI P.M. JAGTAP] I.T.A. NO. 1486/KOL/2017 ASSESSMENT YEAR : 2012-13 SHRI NARESH KUMAR SHARMA.............................APPELLANT C/O SRI JITENDRA KAUSHIK, ADVOCATE, 19D, MUKTARAM BABUY STREET, KOLKATA - 700007 [PAN : AKUPS6148K] INCOME TAX OFFICER..........................RESPONDENT WARD 48(3) 3, GOVT. PLACE (W) KOLKATA - 700001 APPEARANCES BY: SHRI JITENDRA KAUSHIK, ADVOCATE APPEARING ON BEHALF OF THE ASSESSEE. SHRI ROBIN CHOWDHURY, ADDL. CIT APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : OCTOBER 05, 2017 DATE OF PRONOUNCING THE ORDER : OCTOBER 31, 2017 ORDER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT (APPEALS) 14, KOLKATA, DATED 28.04.2017 AND THE GROUNDS RAISED BY THE ASSESSEE THEREIN READ AS UNDER: 1. FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) ERRED IN LAW AS WELL AS ON FACTS IN NOT CONSIDERING THAT THE LD. ASSESSING OFFICER ERRED IN NOT COMPLETING THE ASSESSMENT BY APPLYING THE PROVISION OF SECTION 44AE OF THE ACT, 1961 2. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, WITHOUT PREJUDICE THE GROUND NO 1 THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ADDITION MADE BY THE LD. ASSESSING OFFICER OF A SUM OF RS. 21,52,648/- UNDER THE HEAD UNDISCLOSED INCOME. 2 I.T.A. NO. 1486/KOL/2017 A.Y. 2012-13 NARESH KUMAR SHARMA 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUAL WHO IS ENGAGED IN THE BUSINESS OF HIRING OF HEAVY VEHICLES. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY HIM ON 28.12.2012 DECLARING A TOTAL INCOME OF RS. 2,22,397/- IN THE SAID RETURN, INCOME FROM BUSINESS OF HIRING OF HEAVY VEHICLES WAS OFFERED BY THE ASSESSEE AS PER THE PROVISIONS OF SECTION 44AE OF THE ACT AND ACCORDINGLY INCOME FROM 5 TRUCKS OWNED BY THE ASSESSEE WAS DECLARED @ RS. 5,200/- PER MONTH PER TRUCK AGGREGATING TO RS. 2,28,800/-. INCOME FROM OTHER SOURCES WAS DECLARED BY THE ASSESSEE AT RS. 51,946/- AND AFTER CLAIMING DEDUCTION OF RS. 58,349/- UNDER SECTION 80C, THE TOTAL INCOME OF RS. 2,22,397/- WAS DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS CALLED UPON BY THE A.O. TO EXPLAIN THE SOURCE OF MARGIN MONEY AT 10% PAID FOR NEW TRUCKS PURCHASED DURING THE YEAR UNDER CONSIDERATION FOR RS. 30,78,432/-. THE ASSESSEE HOWEVER COULD NOT OFFER ANY SATISFACTORY EXPLANATION IN THIS REGARD HE ALSO DID NOT PRODUCE THE BOOKS OF ACCOUNT. HE FURTHER COULD NOT OFFER ANY SATISFACTORY EXPLANATION AS REGARDS THE DRAWINGS MADE BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION WHICH THE A.O. ESTIMATED AT RS. 1,58,349/-. ACCORDINGLY, AFTER GIVING CREDIT FOR THE INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME, THE BALANCE AMOUNT OF RS. 2,80,749/- WAS TREATED BY THE A.O. AS UNEXPLAINED INVESTMENT/EXPENDITURE OF THE ASSESSEE. HE ALSO TREATED TOTAL DEPRECIATION ALLOWABLE TO THE ASSESSEE AMOUNTING TO RS. 11,45,432/- AS THE NOTIONAL INCOME OF THE ASSESSEE. IN THE BANK ACCOUNT OF THE ASSESSEE A SUM OF RS. 3,20,789/- WAS CREDITED WHICH WAS CLAIMED TO A LOAN BY THE ASSESSEE. THE ASSESSEE HOWEVER COULD NOT SUBSTANTIATE THE 3 I.T.A. NO. 1486/KOL/2017 A.Y. 2012-13 NARESH KUMAR SHARMA SAID CLAIM AND THE AMOUNT OF RS. 3,20,789/- ACCORDINGLY WAS TREATED AS BY THE A.O. AS UNEXPLAINED INCOME OF THE ASSESSEE. THUS THE TOTAL ADDITIONS OF RS. 21,52,648/- WERE MADE BY THE A.O. TO THE TOTAL INCOME OF THE ASSESSEE AND THE ASSESSMENT WAS COMPLETED BY HIM ON A TOTAL INCOME OF RS. 23,75,045/- UNDER SECTION 143(3) VIDE AN ORDER DATED 08.01.2015. 3. AGAINST THE ORDER PASSED BY THE A.O. UNDER SECTION 143(3), AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT (A) AND SINCE THE SUBMISSIONS MADE BY THE ASSESSEE IN SUPPORT OF HIS CASE WERE NOT FOUND ACCEPTABLE BY THE LD. CIT (A), HE PROCEEDED TO UPHOLD THE ORDER PASSED BY THE A.O. UNDER SECTION 143(3) FOR THE FOLLOWING REASONS GIVEN IN HIS IMPUGNED ORDER: THE APPELLANT, DURING APPEAL HAS TRIED TO ADDUCE EVIDENCE WITHOUT EXPLAINING AS TO THE REASONS AS TO WHY THIS WAS NOT PRODUCED DURING ASSESSMENT PROCEEDINGS. THE ASSESSMENT ORDER CLEARLY STATES THAT THE APPELLANT WAS EXAMINED UNDER OATH DURING WHICH HE MENTIONED THAT HE HAD RECEIVED THE SAID CREDITS IN HIS ACCOUNT AS LOANS. DESPITE THIS, HE DID NOT DEEM IT FIT TO PROVIDE THE AO WITH THE DETAILS OF THE LOANERS INCLUDING THEIR NAMES AND ADDRESSES. THIS CAN ONLY BE CONSTRUED AS A DELIBERATE ATTEMPT BY THE APPELLANT TO STYMIE ANY EFFORTS AT INQUIRY BY THE AO. SUCH A DELIBERATE EFFORT, WITHOUT CAUSE, CAN ONLY CREATE A PRESUMPTION AGAINST THE APPELLANT AS TO HIS MALA FIDE INTENTIONS BECAUSE THE AO IF THE PRIMARY FACT FINDING AND INVESTIGATING AUTHORITY. IT IS IN KEEPING WITH THE CIVIL PROCEDURE CODE THAT THE RULES FOR INDUCTION OF ADDITIONAL EVIDENCE HAVE BEEN INCLUDED WITHIN THE AMBIT OF INCOME TAX, UNDER RULE 46A. EVIDENCE, INCLUDED AT ANY STAGE, AT THE WHIMS AND FANCIES OF THE ASSESSEE CAN WRECK HAVOC WITH THE ENTIRE PROCESS OF ASSESSMENT WHICH INCLUDES THINGS LIKE INVESTIGATION, EVALUATION ETC. OF THE CASE AS WELL AS EVIDENCE. THE APPELLANT HAS NOT EVEN MADE AN APPLICATION FOR THE INCLUSION OF FRESH EVIDENCE MUCH LESS OFFER ANY EXPLANATIONS AS TO WHY IT WAS NOT PRODUCED EARLIER. THERE IS NO CLAIM THAT OPPORTUNITY WAS NOT PROVIDED TO HIM OR THAT THERE WAS ANY DENIAL OF NATURAL JUSTICE AT ANY STAGE. IN THESE CIRCUMSTANCES, THE APPELLATE AUTHORITY CANNOT SUO MOTO 4 I.T.A. NO. 1486/KOL/2017 A.Y. 2012-13 NARESH KUMAR SHARMA INCLUDE ADDITIONAL EVIDENCE ADMITTEDLY NOT PRODUCED BEFORE THE AO WITHOUT CAUSE. IN THESE CIRCUMSTANCES I CANNOT DIFFER WITH THE FINDINGS OF THE AO WITH REGARD TO THE DEPOSITS IN HIS BANK ACCOUNT. THE ADDITION THEREFORE STANDS CONFIRMED. WITH REGARD TO THE COST OF ACQUISITION OF THE TRUCKS, THE SITUATION IS SIMILAR TO THAT DISCUSSED ABOVE. THE APPELLANT DID NOT DEEM IT FIT TO PROVIDE THE AO WITH EVEN THE COST OF ACQUISITION OF THE TRUCKS OR FROM WHOM THEY WERE ACQUIRED. THE FACT THAT THIS WAS MENTIONED IN THE BALANCE SHEET DOES NOT IN ANY WAY SUBSTANTIATE THE CLAIM OF THE APPELLANT. THERE HAS BEEN A DELIBERATE EFFORT TO DEPRIVE THE AO OF ANY DOCUMENTARY EVIDENCE THAT MIGHT HELP HIM IN ESTABLISHING THE COST OF THE TRUCKS. THERE HAVE BEEN NO INVOICES PROVIDED, NO BILLS, NOTHING AT ALL. SIMILARLY, THE APPELLANT HAS NOT PROVIDED THE AO WITH INFORMATION AS REGARDS THE SOURCES OF FINANCE FOR THESE TRUCKS. NO PAPER-WORK THAT MUST HAVE BEEN DONE FOR GETTING THESE FINANCES HAS BEEN PROVIDED. THE TRUCKS, CONVENTIONALLY ARE SENT TO BODY BUILDERS AFTER THEIR ACQUISITION. THE COSTS INVOLVED AS WELL AS THE NAMES AND OTHER DETAILS OF THE BODY BUILDERS HAVE NOT BEEN PROVIDED INCLUDING THE SOURCE OF FUNDS FOR PAYING SUCH BODY BUILDERS. EVEN AT THE APPEAL STAGE THERE IS NO MENTION OF THE SOURCE OF FUNDS FOR THE MARGIN MONEY THAT ADMITTEDLY IS REQUIRED IN ANY FINANCING OPERATION. AT THIS STAGE NOW HE IS TRYING TO PRODUCE ADDITIONAL EVIDENCE WITHOUT CAUSE. THE ADDITIONAL EVIDENCE CANNOT BE INTRODUCED AT THIS STAGE ON ACCOUNT OF THE REASONS DISCUSSED ABOVE. THE AO, ON THE OTHER HAND, HAS BEEN MORE THAN REASONABLE AND ALLOWED CREDIT FOR NOTIONAL DEPRECIATION, TREATING THE AMOUNT OF SUCH NOTIONAL DEPRECIATION AS EXPLAINED SOURCE. IF HE WOULD HAVE ACCEPTED THE APPLICATION OF SECTION 44AE WITHOUT APPLICATION OF MIND THEN THE APPELLANT WOULD HAVE BEEN DEPRIVED OF THE BENEFIT OF NOTIONAL DEPRECIATION AND THE AMOUNT OF UNEXPLAINED INVESTMENT WOULD HAVE BEEN HIGHER BY THAT MUCH AMOUNT. THE AO HAS IN FACT ALSO TAKEN INTO ACCOUNT THE AMOUNT OF UNEXPLAINED DEPOSITS IN BANK WHILE CALCULATING THE AMOUNT OF UNEXPLAINED INVESTMENT IN TRUCKS. I CANNOT FIND FAULT WITH THE FINDINGS OF THE AO AND THE SAME STAND CONFIRMED. AGGRIEVED BY THE ORDER OF THE LD. CIT (A), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 5 I.T.A. NO. 1486/KOL/2017 A.Y. 2012-13 NARESH KUMAR SHARMA 4. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE, THE INCOME FROM BUSINESS OF HIRING OF HEAVY VEHICLES WAS DECLARED BY THE ASSESSEE IN HIS RETURN OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION AS PER THE PROVISION OF SECTION 44AE, THE RELEVANT PORTION OF WHICH AS CONTAINED IN SECTION (1) AND (2) IS EXTRACTED BELOW: 1. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN SECTIONS 28 TO 43C, IN THE CASE OF AN ASSESSEE, WHO OWNS NOT MORE THAN TEN GOODS CARRIAGES [AT ANY TIME DURING THE PREVIOUS YEAR] AND WHO IS ENGAGED IN THE BUSINESS OF PLYING, HIRING OR LEASING SUCH GOODS CARRIAGES, THE INCOME OF SUCH BUSINESS CHARGEABLE TO TAX UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION SHALL BE DEEMED TO BE THE AGGREGATE OF THE PROFITS AND GAINS, FROM ALL THE GOODS CARRIAGES OWNED BY HIM IN THE PREVIOUS YEAR, COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF SUB-SECTION (2). 2. FOR THE PURPOSES OF SUB-SECTION (1), THE PROFITS AND GAINS FROM EACH GOODS CARRIAGES:- (I) BEING A HEAVY GOODS VEHICLE, SHALL BE AN AMOUNT EQUAL TO FIVE THOUSAND RUPEES FOR EVERY MONTH OR PART OF A MONTH DURING WHICH THE HEAVY GOODS VEHICLE IS OWNED BY THE ASSESSEE IN THE PREVIOUS YEAR OR AN AMOUNT CLAIMED TO HAVE BEEN ACTUALLY EARNED FROM SUCH VEHICLE, WHICHEVER IS HIGHER; (II) OTHER THAN A HEAVY GOODS VEHICLE, SHALL BE AN AMOUNT EQUAL TO FOUR THOUSAND FIVE HUNDRED RUPEES FOR EVERY MONTH OR PART OF A MONTH DURING WHICH THE GOODS CARRIAGE IS OWNED BY THE ASSESSEE IN THE PREVIOUS YEAR OR AN AMOUNT CLAIMED TO HAVE BEEN ACTUALLY EARNED FROM SUCH VEHICLE, WHICHEVER IS HIGHER. 5. THE LEARNED COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE ASSESSEE HAVING DECLARED THE INCOME FROM THE BUSINESS OF HIRING HEAVY VEHICLES UNDER SECTION 44AE, WAS NOT REQUIRED TO MAINTAIN THE BOOKS OF ACCOUNT OF THE SAID BUSINESS AND THE ASSESSING OFFICER THEREFORE WAS NOT JUSTIFIED IN MAKING VARIOUS ADDITIONS TO THE TOTAL 6 I.T.A. NO. 1486/KOL/2017 A.Y. 2012-13 NARESH KUMAR SHARMA INCOME OF THE ASSESSEE FOR HIS FAILURE TO PRODUCE THE BOOKS OF ACCOUNTS. IN SUPPORT OF THIS CONTENTION, HE HAS RELIED ON THE DECISION OF HONBLE PUNJAB AND HARYAN HIGH COURT IN THE CASE OF CIT VS SURINDER PAL ANAND (2010) 192 TAXMAN 264 WHEREIN IT WAS HELD IN THE CONTEXT OF SECTION 44AD, THE PROVISIONS OF WHICH ARE ANALOGOUS TO SECTION AE, THAT ONCE EXEMPTION FROM MAINTENANCE OF BOOKS OF ACCOUNTS HAS BEEN PROVIDED UNDER THE SPECIAL PROVISIONS OF SECTION 44AD AND PRESUMPTIVE TAX BASIS IS ADOPTED FOR DETERMINING TAXABLE INCOME, THE ASSESSEE IS NOT UNDER ANY OBLIGATION TO EXPLAIN INDIVIDUAL ENTRY OF CASH DEPOSITS FOUND TO BE MADE IN HIS BANK ACCOUNT. HE HAS ALSO RELIED ON THE DECISION OF THIS TRIBUNAL IN THE CASE OF KAPIL DEY VS ITO (ITA NO. 854 856/KOL/2010 DATED 25.11.2011) WHEREIN IT WAS HELD BY RELYING ON THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SURINDER PAL ANAND (SUPRA) THAT NO ADDITION ON ACCOUNT OF UNEXPLAINED BANK DEPOSITS HAVING DIRECT NEXUS WITH THE RECEIPTS OF THE ASSESSEES BUSINESS CAN BE MADE UNDER SECTION 69 WHEREIN THE ASSESSEE WAS BEING ASSESSED UNDER SECTION 44F OF THE ACT. IN MY OPINION, THE RATIO OF THE DECISION OF HONBLE PUBJAB & HARYANA HIGH COURT IN THE CASE OF SURINDER PAL ANAND (SUPRA) AS WELL AS THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF KAPIL DEY (SUPRA) IS SQUARELY APPLICABLE IN THE PRESENT CASE AND RESPECTFULLY FOLLOWING THE SAME, I DELETE THE ADDITIONS MADE BY THE A.O. AND CONFIRMED BY THE LD. CIT (A) TO THE TOTAL INCOME OF THE ASSESSEE WHEN THE INCOME FROM HIS BUSINESS FROM HIRING OF HEAVY VEHICLES WAS OFFERED BY THE ASSESSEE AS PER THE PROVISIONS OF SECTION 44AE OF THE ACT. 7 I.T.A. NO. 1486/KOL/2017 A.Y. 2012-13 NARESH KUMAR SHARMA 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST OCTOBER, 2017. SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER DATED: 31/10/2017 BISWAJIT, SR. PS COPY OF ORDER FORWARDED TO: 1. SHRI NARESH KUMAR SHARMA, C/O. SRI JITENDRA KAUSHIK ADVOCATE, 19-D, MUKTARAM BABU STREET, KOLKATA 07. 2. ITO, WARD 48(3), 3, GOVT. PLACE (W), KOLKATA 01. 3. THE CIT(A) 4. THE CIT 5. DR TRUE COPY, BY ORDER, SR. P.S. / H.O.O. ITAT, KOLKATA