Smt. Balbir Kaur, Jalandhar V. The Income Tax Officer, Phagwara

ITA 151/ASR/2016

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0763 (ITAT-AMRITSAR)
• Duration Of Justice: 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2004-2005
• Appeal Filed On: 11-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SH P N ARORA
• Keywords: Unexplained investment
• Section: 133A; 234B; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR (SMC). BEFORE SH. A.D. JAIN, JUDICIAL MEMBER ITA NO.151(ASR)/2016 ASSESSMENT YEAR:2004-05 PAN: ABNPK1078L SMT. BALBIR KAUR, PROP. VS. INCOME TAX OFFICER, M/S. RAM SINGH & SONS, WARD-2, NEAR RAILWAY STATION, PHAGWARA. PHILLAUR, DISTT. JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH.SH. P.N.ARORA, ADVOCATE RESPONDENT BY: SH. UMESH TAKYAR, DR DATE OF HEARING: 19/05/2016 DATE OF PRONOUNCEMENT: 23/05/2016 ORDER THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER, DATED 18.01.2016, PASSED BY THE CIT(A), JALANDHAR, FOR TH E ASSESSMENT YEAR 2004-05. THE ASSESSEE HAS RAISED THE FOLLOWING GROU NDS OF APPEAL: 1. THAT THE ORDER OF THE AO AS WELL AS THAT OF CIT (A) HAS AGAINST LAW, FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. 2. THAT NO NOTICE U/S 148 WAS EVER SERVED ON THE AS SESSEE, HENCE, THE REASSESSMENT DESERVES TO BE QUASHED AS V OID ABINITO. 3. THAT THE CIT(A) IS NOT JUSTIFIED IN CONFIRMING T HE ADDITION OF RS.100,000/- ON ACCOUNT UNDISCLOSED INVESTMENT FOR MAKING UNDISCLOSED SALES WHICH IS BASED ON PURE GUESS WORK OF THE ASSESSING OFFICER. ITA NO.151(ASR)/2016 A.Y. 2004-05 2 4. THAT THE CIT(A) HAS FURTHER ERRED IN CONFIRMING THE ADDITION OF RS.1,32,000/- ON ACCOUNT OF GROSS PROFIT EARNED ON ESTIMATED SALES. 5. THAT THE APPELLANT REQUEST FOR ACCEPTING THE RE TURNED INCOME BY DELETING THE IMPUGNED ADDITION MADE IN TH E DECLARED INCOME OF THE ASSESSEE. 6. THAT THE INTEREST U/S 234B AND 234C HAS WRONGLY BEEN CHARGED. 2. GROUND NO.1 IS GENERAL IN NATURE. 3. GROUND NO.2 HAS NOT BEEN PRESSED BY THE LD. COUN SEL FOR THE ASSESSEE, HENCE, THE SAME IS DISMISSED AS NOT PRESS ED. 3. AS REGARDS GROUND NOS. 3 & 4, THE ASSESSEE HAS CHALLENGED THE ACTION OF THE LD. CIT(A), IN CONFIRMING THE ADDITI ON OF RS.1,00,000/- ON ACCOUNT OF UNDISCLOSED INVESTMENT AND RS.1,32,000/- ON ACCOUNT OF GROSS PROFIT EARNED ON ESTIMATED PROFITS. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E DERIVES INCOME FROM MANUFACTURING AND SALE OF DIESEL ENGINE PARTS UNDER THE NAME AND STYLE OF PROPRIETORY CONCERN NAMELY, M/S. RAM SING H AND SONS AND FILED HER RETURN OF INCOME DECLARING INCOME AT RS.1,87,38 7/-. AS PER INFORMATION AVAILABLE WITH THE AO, A SURVEY OPERAT ION U/S 133A OF THE ACT WAS CONDUCTED ON THE BUSINESS PREMISES OF ONE M /S. AZAD ENGINEERING WORKS, BATHINDA AND DURING THE COURSE O F THE SURVEY CERTAIN INCRIMINATING DOCUMENTS PERTAINING TO VARIOUS ASSE SSMENT YEAS WERE FOUND AND IMPOUNDED BY THE SURVEY TEAM. DURING THE PROCEEDINGS BEFORE THE SETTLEMENT COMMISSION, M/S. AZAD ENGINE ERING WORKS HAD ITA NO.151(ASR)/2016 A.Y. 2004-05 3 ADMITTED UNRECORDED/UNDISCLOSED TRANSACTIONS WITH D IFFERENT PARTIES INCLUDING THE ASSESSEE. THE TRANSACTIONS PERTAINING TO THE ASSESSEE WERE TO THE TUNE EXTENT OF RS.11,01,000/-. ON THE BASIS OF THIS INFORMATION, PROCEEDINGS U/S 148 OF THE ACT, WERE INITIATED AGAI NST THE ASSESSEE. THE AO, THEREFORE, TREATED THESE TRANSACTIONS TO THE TU NE OF RS.11,01,000/- AS UNRECORDED SALE OF THE ASSESSEE PERTAINING THE Y EAR UNDER CONSIDERATION AND MADE AN ADDITION OF RS.1,32,000/- TO THE RETURNED INCOME OF THE ASSESSEE ON ACCOUNT OF UNDISCLOSED G ROSS PROFIT. APART FROM THIS, ANOTHER ADDITION OF RS.9,68,991 (RS.11,0 1,000/- - RS.1,32,009/-) WAS ALSO MADE, ON ACCOUNT OF UNACCOU NTED INVESTMENT. 5. ON APPEAL, THE LEARNED CIT(A) CONFIRMED THE ADDI TION OF RS.1,32,000/- ON ACCOUNT OF UNDISCLOSED GROSS PROFI T RATE BUT THE ADDITION MADE ON ACCOUNT OF UNACCOUNTED INVESTMENT OF RS. 9,6,8991/- WAS REDUCED TO RS.1,00,000/-. 6. NOW, AGGRIEVED WITH THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THIS BENCH. 7. THE LD. COUNSEL FOR THE ASSESSEE, SH. P.N. ARORA , ADVOCATE, SUBMITTED THAT UNDER THE INCOME TAX ACT, ADDITION O N ACCOUNT OF NET PROFIT RATE CAN BE MADE FOR THE PURPOSE OF ASSESSME NT AND NOT ON THE BASIS OF GROSS PROFIT RATE. HE FURTHER PLEADED THA T BOTH THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN MAKING AND CONFIRMING T HE ADDITION BY APPLYING NET PROFIT RATE AND REQUESTED THE ADDITION SO MADE MAY KINDLY BE DELETED. THE LD. COUNSEL FOR THE ASSESSEE ALSO S UBMITTED THAT WHERE ITA NO.151(ASR)/2016 A.Y. 2004-05 4 GROSS PROFIT RATE IS APPLIED, NO SEPARATE ADDITION ON ACCOUNT OF PURCHASES OUTSIDE THE BOOKS ACCOUNT OF ACCOUNT CAN BE MADE. THUS, THE ADDITION OF RS. 1,00,000/- SUSTAINED BY THE LD. CIT (A) SHOULD BE DELETED. 8. ON THE OTHER HAND, THE LD. DR RELIED ON THE IMPU GNED ORDER. 9. HAVING HEARD THE RIVAL CONTENTIONS, I AM OF THE CONSIDERED VIEW THAT THE LD. CIT(A) IS NOT JUSTIFIED IN SUSTAINING THE ADDITION OF RS.1,32,000/- BY APPLYING G.P. RATE ON THE ALLEGED SALES. UNDER THE INCOME TAX ACT, ADDITION ON ACCOUNT OF NET PROFIT R ATE CAN BE MADE FOR THE PURPOSE OF ASSESSMENT AND NOT ON THE BASIS OF G .P. RATE. AS SUCH, THE ADDITION OF RS.1,32,000/- CONFIRMED BY THE LD. CIT(A) IS DELETED. IT IS ALSO PERTINENT TO MENTION HERE THAT WHERE N.P. RATE IS APPLIED, NO SEPARATE ADDITION CAN BE MADE ON ACCOUNT OF PURCH ASES MADE OUTSIDE THE BOOKS OF ACCOUNT. THEREFORE, THE ADDITION OF RS .1,00,000/- SUSTAINED BY THE LD. CIT(A) ON ACCOUNT OF UNDISCLOSED INVESTM ENT FOR MAKING UNDISCLOSED SALES IS DELETED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23/05/ 2016. SD/- (A.D. JAIN) JUDICIAL MEMBER /SKR/ DATED: 23/05/2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SMT. BALBIR KAUR, PROP. M/S. RAM SINGH & SONS, PHILLAUR. 2. THE ITO WARD-2, PHAGWARA. 3. THE CIT(A), JALANDHAR. 4. THE CIT, JALANDHAR. 5. THE SR DR, ITAT, AMRITSAR.