Shri Ranjitsinh K. Rathod, Gandhinagar V. ITO, Ward-4, Mehsana

ITA 1496/AHD/2018

• Counselvise Citation: [NaN] 107 COUNSELVISE.COM (IT) 1913 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 07-06-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 44AD; 11; 15; 271(1)(b); 139; 92; 142(1); 143(2)

Judgement Text

ITA No.1496/Ahd/2018 A.Y. 2009-10 Page 1 of 5 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER (Conducted through Virtual Court) ITA No.1496/Ahd/2018 Assessment Year: 2009-10 Shri Ranjitsinh K. Rathod, vs. The Income Tax Officer, Prop. M/s. R.K. Traders, Ward – 4, Mehsana. 13/B, Mill Kamdar Society, Kalol, Dist. Ganhinagar. [PAN – AFHPR 1121 D] (Appellant) (Respondent) Appellant by : Shri U.S. Bhati, AR Respondent by : Shri R.R. Makwana, Sr. D.R. Date of hearing : 08.12.2021 Date of pronouncement : 04.01.2022 O R D E R PER SUCHITRA KAMBLE, JUDICIAL MEMBER : This appeal is filed by the assessee against the order dated 15.03.2018 passed by the CIT(A), Gandhinagar, Ahmedabad for the Assessment Year 2009-10 2. The grounds of appeal raised by the assessee are as under : “1.0 The Learned Commissioner of Income Tax (Appeals) erred in law and on facts in dismissing the appeal of the appellant. 2.0 The notice issued u/s. 148 dated 26 th March, 2016 of the Income Tax Act, 1961 was bad in law and hence the assessment order framed u/s. 143(3) r.w.s 147 pursuant to the above Notice is bad and illegal. 3.0 The Issuer of Notice u/s.148 dated 26 th March, 2016 by the learned Assessing Officer admittedly without knowing whether the relevant facts were disclosed in the return or not was issued merely on the basis of ‘suspicion’ in order to conduct fishing and roving enquiries is not sustainable in the eyes of the law and hence the same may be quashed. ITA No.1496/Ahd/2018 A.Y. 2009-10 Page 2 of 5 4.0 The learned Commissioner of Income Tax (Appeals) erred in law and on facts in confirming the addition of Rs.11,23,617/- being G.P. @ 9.5% on a sum of Rs.1,44,36,717/- 5.0 Without prejudice to the above Ground No.4.0, the learned Commissioner of Income Tax (Appeals) further erred in law and on facts in confirming G.P. addition after applying G.P. @ 9.5% on a sum of Rs.7,39,767/- being cash deposit in Bank Account and on Rs.88,519/- a sum being not specified in the assessment order. 6.0 The appellant may be allowed to add, amend, alter or raise additional grounds of appeal” 3. The assessee is the proprietor of M/s. R. K. Traders. As per the AIR information available with the Office of the Assessing Officer the assessee has made cash deposits of Rs.13,27,954/- in saving bank account of Axis Bank Ltd. To verify the cash deposit, a letter dated 08.02.2016 was issued for verification of the above transaction with prior approval of Pr. CIT, Gandhinagar, Ahmedabad. No compliance was made by the assessee. Again, a reminder letter dated 29.02.2016 was issued to assessee. No reply was made by the assessee. Further, information as received from Assistant Commissioner (Preventive), Central Excise, Ahmedabad-III, Ahmedabad that R.K. Traders, situated at Mill Kamdar Society, Kalol which is a proprietary concern of Shri Ranjitsinh Kanubhai Rathod, during the F.Y. 2008-09 has used the business premises of M/s. Wonder Packaging, C/1/B, 512/13, Phase-I, GIDC, Chhatral and issued invoices of Rs.1,09,99,263/- to various concerns against sell of corrugated boxes. 4. The assessee filed return of income for the Assessment Year 2009-10 on 23.02.2011 declaring gross receipts of Rs.26,09,168/- on total income of Rs.4,78,570/- was declared under Section 44AD of the Income Tax Act, 1961. The assessment was reopened by issuing notice under Section 148 of the Act on 26.03.2016 after recording the reasons and taking prior approval from the Pr. CIT for verification of the cash deposits as appearing in Savings Bank Account of the assessee. As per AIR information available in Assessing Officer’s Office and ascertained transactions of Rs.1,09,99,263/-. In response to the notice under section 148 of the Act, the assessee vide letter dated 12.05.2016 furnished the reply and stated therein that ITA No.1496/Ahd/2018 A.Y. 2009-10 Page 3 of 5 return filed on 23.02.2011 should be treated as return filed in response to notice under Section 148 of the Act. Copy of the reasons recorded prior to issuing notice under Section 148 of the Act was also provided to the assessee on 16.05.2016. Notice under Section 143(2) and 142(1) of the Act along with the detailed questionnaire was issued to the assessee on 15.05.2016 seeking compliance on or before 25.05.2016. The Ld. AR of the assessee furnished the requisite details such as cash book, bank account statements and other document before the Assessing Officer. The Assessing Officer made addition of Rs.11,23,617/-. In respect of estimation of income (GP addition), the Assessing Officer also made addition of Rs.19,456/- in respect of Savings Bank interest income. 5. Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 6. The Ld. AR submitted that the notice issued under Section 148 of the Act dated 26.03.2016 is bad in law as the Assessing Officer without knowing whether relevant facts disclosed in the return or not, issued the same notice merely on the basis of suspicion in order to conduct enquiries which are not sustainable under law. Thus, the Ld. AR submitted that on this ground itself the assessment should be quashed. 7. Ld. DR submitted that the reopening was exercised by the Revenue after receipt of AIR information from the Central Excise Department which was taken into account by the Assessing Officer wherein one of the parties is the assessee himself (i.e. his proprietary concern). The Ld DR submitted that the reopening was just and propr. 8. We have heard both the parties and perused all the relevant materials available on record. It is pertinent to note that the reasons recorded on 21.03.2016 has categorically mentioned that R.K. Traders is a proprietary concern of the assessee which has business dealings with M/s. Wonder Packaging Industries as the business premises of M/s. Wonder Packaging Industries is used by the assessee (his proprietary firm). The assessee has filed return of income in the year 23.02.2011 but has not mentioned this particular issue/income in the said return related to the transactions. In fact, in respect of notice under Section 148 of the Act, the assessee ITA No.1496/Ahd/2018 A.Y. 2009-10 Page 4 of 5 opted that the said earlier return filed in February 2011 should be taken as it is. The reopening was done with the prior approval and proper satisfaction and the legal viable reasons. Therefore, the contention of the assessee that the notice issued under Section 148 of the Act itself is bad in law and is not sustainable. Therefore, ground nos.2 & 3 are dismissed. 9. As regards merits of the case, the assessee submitted that the CIT(A) was not right in confirming the addition of Rs.11,23,617/- being G.P. @ 9.5% on a sum of Rs.1,44,36,717/-. The Ld. AR has also taken without prejudice ground thereby stating that the CIT(A) erred in confirming the G.P. addition after applying G.P. @ 9.5% on a sum of Rs.7,39,767/- being cash deposit in Bank account and on Rs.88,519/- being not specified in the Assessment Order. The Ld. AR submitted that the Assessing Officer has made G.P. addition on the estimated tax and in fact the working out of the Assessing Officer is not just and proper. From the Paper Book the assessee has explained that the proper quantification of G.P. has to be determined and the G.P. which was taken into account by the assessee should have been considered by the Assessing Officer. The assessee denied the fact that the estimation of its profit @ 9.5% was admitted by the Assessing Officer. 10. The Ld. DR relied upon the Assessment Order and the order of the CIT(A). 11. We have heard both the parties and perused all the relevant materials available on record. It is pertinent to note that the quantification before the Assessing Officer given by the assessee as well as the calculations done by the Assessing officer both seems to be unclear and the basis of G.P. has to be taken into account. No past historical figures were produced before us. Therefore, it will be appropriate to remand back this matter to the file of Assessing Officer for proper adjudication and quantification of the actual G.P. Needless to say the assessee be given opportunity of hearing by following principles of natural justice. Ground nos.4 & 5 are partly allowed for statistical purposes. ITA No.1496/Ahd/2018 A.Y. 2009-10 Page 5 of 5 12. In the result, appal of the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on this 4 th day of January, 2022. Sd/- Sd/- (WASEEM AHMED) (SUCHITRA KAMBLE) Accountant Member Judicial Member Ahmedabad, the 4 th day of January, 2022 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad