Kundan Ram Kirdoliya S/o Sh. Dularam, MAKRANA V. ITO, MAKRANA

ITA 175/JODH/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9436 (ITAT-JODHPUR)
• Duration Of Justice: 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 31-01-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 24-03-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M KUMAR
• Assessee Lawyers: NONEWRITTEN SUBMISSION
• Keywords: Unexplained investment; Reason to believe
• Section: 147; 69; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI S.V. MEHROTRA, A.M. AND SHRI V. DURGA R AO, J.M. ITA NO. 175/JU/2010 ASSESSMENT YEAR: 2005-06 KUNDAN RAM KIRDOLIYA, APPELLANT C/O DILEEP KUMAR MATHUR CHARTERED ACOCUNTANTS, STATION ROAD, MAKRANA.. VS. INCOME TAX OFFICER, RESPONDENT WARD-1, MAKRANA APPELLANT BY : NONE(WRITTEN SUBMISSION) RESPONDENT BY : MR. M. KUMAR . ORDER PER V. DURGA RAO, J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A), JODHPUR, PASSED ON 01/01/2008 FOR THE ASSES SMENT YEAR 2005-06 WHEREIN THE ASSESSEE HAS RAISED THE FOLLOWI NG GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES, THE LEARN ED CIT(A), JODHPUR HAS ERRED IN CONFIRMING PROCEEDINGS U/S 147 /148 OF THE INCOME TAX ACT. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A), JODHPUR HAS ERRED IN CONFIRMING THE ADDITION OF RS. 1,44,400/- 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A), JODHPUR HAS ERRED IN CONFIRMING THE ADDITION OF RS. 72,345/-. ITA NO. 175/JU/2010 KUNDAN RAM KIRDOLIYA 2 2. AS REGARDS GROUND NO.1 REGARDING REOPENING OF AS SESSMENT, IT IS OBSERVED THAT THE ASSESSEE FILED ORIGINAL RETURN OF INCOME ON 09/12/2005. SUBSEQUENTLY, THE AO HAD INITIATED THE PROCEDDINGS U/S 147 ON THE BASIS OF AIR INFORMATION RECEIVED FROM I DBI BANK THROUGH THE DCIT, CIRCLE -1, AJMER. THEREAFTER, THE AO AFTE R RECORDING REASONS THEREOF HAD INITIATED PROCEEDINGS U/S 147 ON 18/02/ 2008 ISSUING NOTICE U/S 148 OF THE ACT. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE HAD SUBMITTED BEFORE THE AO THAT THE ORIGINAL RETUR N OF FILED FOR AY 2005-06 MAY BE TREATED AS FILED IN RESPONSE TO THE NOTICE ISSUED U/S 148. DURING THE COURSE OF APPELLATE PROCEEDINGS, TH E ASSESSEE HAD SUBMITTED THAT THE AO HAD NOT CONSIDERED THE BANK B ALANCE AND THERE IS NO BASIS FOR THE ISSUE OF NOTICE U/S 148. THE LD . CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HAD OBS ERVED THAT ASSESSEE HAD NOT DISCLOSED THE CASH DEPOSITS AND HE DISCLOSED ONLY MARBLE COMMISSION INCOME AND INTEREST INCOME IN HIS RETURN OF INCOME AND THERE WAS A REASON TO BELIEVE THAT THE I NCOME HAD ESCAPED ASSESSMENT. THEREFORE, THE CIT(A) UPHELD THE ACTION OF THE AO IN REOPENING THE ASSESSMENT U/S 147 OF THE ACT. 3. NONE APPEARED ON BEHALF OF THE ASSESSEE, HOWEVER , WRITTEN SUBMISSION WAS FILED WHEREIN THE ASSESSEE RELIED UP ON THE FOLLOWING CASES: 1. MANOJ KUMAR GUPTA VS. ITO, [2008] 114 TTJ (JP) 25 2. SHRI WARAN SAHAKARIDUDH UTPADK PRAKRIYA SANGH VS . ACIT, 152 TAXMAN 304 (BOM) 3. MRS. VINITA JAIN VS. ITO, 158 TAXMAN 167 (DELHI) 4. WE HAVE CONSIDERED THE ENTIRE FACTS OF THE CASE. IT IS NOT RELEVANT TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND WHEN THE ASSESSEE WAS NOT DISCLOSED THE BANK DEPOSITS, THE A O IS HAVING EVERY REASON TO BELIEVE THAT THE INCOME HAD ESCAPED ASSES SMENT AND REOPEN THE ASSESSMENT. THEREFORE, WE UPHOLD THE ORDER OF C IT(A) ON THIS ISSUE. ITA NO. 175/JU/2010 KUNDAN RAM KIRDOLIYA 3 5. AS REGARDS GROUND NO. 2 REGARDING ADDITION OF R S. 1,44,400/- IT IS OBSERVED THAT ASSESSEES MAIN SOURCE OF INCOME I S COMMISSION INCOME. HE HELPS OTHER PERSONS IN PURCHASE AND SALE OF MARBLE GOODS AND EARN COMMISSION INCOME. HE IS DOING THIS BUSINE SS FOR THE PAST MANY YEARS. THE ASSESSEE FILED ORIGINAL RETURN OF INCOME ON 09/12/2005 DECLARING TOTAL INCOME OF RS. 98,104/-. ON THE BASIS OF AIR INFORMATION RECEIVED FROM IDBI LTD., PERTAINING TO ASSESSMENT FOR FY 2004-05, THE AO FOUND THAT THE TOTAL AMOUNT OF R S. 14,61,000/- HAD BEEN DEPOSITED ON VARIOUS DATED IN CASH IN THE S/B A/C OF THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. IT WA S NOTED THAT THE CASH DEPOSITS IN BANK ACCOUNT HAD BEEN MADE FROM DI FFERENT CITIES IN INDIA LIKE PHAGWARA, FARIDABAD, DHARADUN, ETC. HENC E, THE AO ISSUED NOTICE U/S 148 AND ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE AMOUNT OF RS. 14,61,000/- DEPOSITED IN HIS BANK ACC OUNT IN CASH MAY NOT BE TREATED AS HIS INCOME FROM UNDISCLOSED SOURC ES AND THERE BY DEPOSITED IN BANK ACCOUNT AND ACCORDINGLY WHY THE S AME MAY NOT BE ADDED TO HIS TOTAL INCOME. IN REPLY, THE AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS DOING COMMISSION BUSINESS. ASS ESSEE RECEIVED ORDER FOR HELP IN PURCHASE OF GOODS FROM CUSTOMER, WHICH BELONGS TO DIFFERENT AREA OF COUNTRY. THESE PURCHASERS DEPOSIT ED AMOUNT IN ASESSEES BANK ACCOUNT. ASSESSEE PURCHASED GOODS ON THEIR BEHALF FORM LOCAL MARKET. SALE BILLS WERE ISSUED BY THOSE DEALERS FROM WHOM ASSESSEE PURCHASED ON BEHALF OF OTHERS. ASSESSEE AL SO PAID TO DEALERS FOR PURCHASE OF GOODS. FOR THESE SERVICES, HE CHARG ED HIS COMMISSION. HENCE, TOTAL DEPOSITS AND WITHDRAWAL FROM ASSESSEE BANK ACCOUNT WERE ON BEHALF OF OTHERS. IT WAS CONTENDED THAT THE RE WAS NO JUSTIFICATION TO RS. 14,61,000/- OUT OF HIS INCOME FROM OTHER SOURCES AS THESE ALL TRANSACTIONS WERE HELD ON BEHALF OF OT HER PARTIES. THE AO REJECTED THE EXPLANATION OFFERED BY THE ASSESSEE AN D PROCEEDED TO TAKE THE PEAK AMOUNT DEPOSITED IN ASSESSEES BANK ACCOUN T FROM VARIOUS PLACES, WHICH IS 1,47,000/- AND ONLY THE AMOUNT DEP OSITED ON 6/9/04 OF RS. 2,600/- CONSIDERED AND ACCORDINGLY REST OF T HE AMOUNT OF RS. 1,44,400 (RS. 147000-2600) WAS TREATED AS UNEXPLAIN ED INVESTMENT ITA NO. 175/JU/2010 KUNDAN RAM KIRDOLIYA 4 U/S 69 OF THE ACT, ON THE GROUND THAT THE ASSESSEE HAD NOT PRODUCED ANY PROOF/EVIDENCES IN SUPPORT OF HIS CONTENTION. O N APPEAL, THE CIT(A) CONFIRMED THE ADDITION MADE BY THE AO. AGGRI EVED BY THE ORDER OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 6. NONE APPEARED ON BEHALF OF THE ASSESSEE BEFORE U S, HOWEVER, WRITTEN SUBMISSION HAS BEEN FILED. IN WRITTEN SUBMI SSION, THE ASSESSEE STATED THAT THE ASSESSEE ALWAYS HAS HIS OW N CASH IN HIS HAND. PERUSAL OF BALANCE OF 31/03/2005 SHOWS THAT A SSESSEE RETAIN RS. 88,526/- CASH IN HAND. HE FURTHER STATED THAT T HE AO ASSUMED THAT UP TO 11/09/2004 ASSESSEE DID NOT EARN ANY AMO UNT FROM COMMISSION BUT THE ASSESSEE IS EARNING COMMISSION R EGULARLY. IT WAS STATED THAT THE ASSESSEE EXPLAINED THAT BANK ACCOUN T TRANSACTIONS ARE RELATED TO PURCHASE ON BEHALF OF OTHERS AND PAYMENT TO THOSE PARTIES FROM WHOM ASSESSEE PURCHASED. IT WAS ALSO STATED TH AT MOST OF RECEIPTS IN BANK ACCOUNT ARE OUT OF KISHANGARH, WHI CH SHOWS THAT ASSESSEE RECEIVED FROM PARTIES FOR PURCHASE OF GOOD S. WITHDRAWAL FROM BANK ACCOUNT MADE AT KISHANGARH, WHICH USED FOR PAY MENT. IT SHOWS THAT THESE ROTATIONS ARE ON THE BEHALF OF OTHER PAR TIES. 7. THE LEARNED DR, ON THE OTHER HAND, HAS RELIED UP ON THE ORDERS OF REVENUE AUTHORITIES. 8. WE HAVE HEARD THE LEARNED DR AND PERUSED THE REL EVANT MATERIAL ON RECORD. IT IS OBSERVED THAT THE ASSESSE E WAS DOING COMMISSION BUSINESS THAT HE RECEIVES ORDERS FOR HEL P IN PURCHASE OF GOODS FROM CUSTOMERS, WHO BELONGED TO DIFFERENT ARE AS OF THE COUNTRY. ON BEHALF OF CUSTOMERS, HE PURCHASES GOODS FROM LOC AL MARKET FROM THE DEALERS. THE CUSTOMERS DEPOSIT THE MONEY IN ASS ESSEES BANK ACCOUNT FOR PURCHASE OF GOODS, AND ASSESSEE WITHDRA WS THE SAME FOR PURCHASING THE GOODS REQUIRED BY THE CUSTOMERS. FOR DOING ALL THESE SERVICES, THE ASSESSEE RECEIVES COMMISSION INCOME. THE AO TREATED THE SAID DEPOSITS AS ASSESSEES OWN AND TREATED THE PEAK AMOUNT OF ITA NO. 175/JU/2010 KUNDAN RAM KIRDOLIYA 5 DEPOSITS AS UNEXPLAINED INVESTMENT ON THE GROUND TH AT THE ASSESSEE HAD FAILED TO PRODUCE ANY EVIDENCE IN SUPPORT OF HI S CONTENTION THAT THE CASH DEPOSITED IN HIS BANK ACCOUNT BELONGED TO DIFFERENT PERSONS. SINCE THE ASSESSEE DID NOT FILE ANY EVIDENCE, THE A O PROCEEDED TO TAKE THE PEAK AMOUNT AS UNEXPLAINED INCOME WITHOUT BRING ING ANY MATERIAL ON RECORD TO ESTABLISH THAT THE SAME ARE U NEXPLAINED INVESTMENT OF THE ASEESSEE. WHEN THE ASSESSEE OFFER ED HIS EXPLANATION THAT THE CASH DEPOSITS ARE NOT PERTAINING TO HIM BU T THE SAME ARE DEPOSITED BY THE PERSONS, WHO SOUGHT HIS HELP IN PU RCHASING THE GOODS FROM LOCAL MARKET, THE AO REJECTED THE SAME W ITHOUT ANY REASON. THE CIT(A) CONFIRMED THE ACTION OF THE AO. BY TAKING INTO CONSIDERATION THE FACTS OF THE CASE OF THE ASSESSEE , WE HEREBY DELETE THE ADDITION OF RS. 1,44,500/- MADE BY THE AO BY SE TTING ASIDE THE ORDER OF THE CIT(A). 9. AS REGARDS ADDITION OF RS. 72,345/-, THE AO ESTI MATED PROFIT ON ROTATION OF BANK TRANSACTIONS, AND CALCULATED THE NET PROFIT @ 5% ON RS. 14,46,900, WHICH ARRIVES AT RS. 72,345/-, BY AP PLYING PROVISIONS OF SECTION 44AF OF THE ACT. THE CIT(A) CONFIRMED TH E ACTION OF THE AO. 10. IN THE WRITTEN SUBMISSION FILED BEFORE US, THE ASSESSEE STATED THAT THE INCOME ESTIMATED BY THE AO IS ONLY BASED O N PRESUMPTION. HE FURTHER STATED THAT THE AO DID NOT PROVIDE ANY M ATERIAL, WHICH SHOW THAT THE ASSESSEE MADE SALE OF RS. 14,61,000/- . IT WAS STATED THAT IF THE ASSESSEE SOLD HIS OWN GOODS, HE ALSO RE QUIRES HIS GODOWN. HE ALSO MADE SOME CASH SALE. ALL SALE RECEIPTS OF A DEALER NOT CAME THROUGH BANK ACCOUNT. 11. ON THE OTHER HAND, THE LEARNED DR HAS PLACED RE LIANCE ON THE ORDERS OF THE REVENUE AUTHORITIES. 12. AFTER HEARING THE LEARNED DR AND PERUSING THE R ECORD, WE ARE OF THE VIEW THAT THERE IS A FORCE IN THE SUBMISSIONS M ADE IN THE WRITTEN ITA NO. 175/JU/2010 KUNDAN RAM KIRDOLIYA 6 SUBMISSION THAT THE INCOME ESTIMATED BY THE AO IS O NLY BASED ON PRESUMPTION WITHOUT BRINGING ANY MATERIAL ON RECORD THAT THE ASSESSEE MADE SALE OF RS. 14,61,000/-. AS STATED BY THE ASSESSEE, THE ASSESSEE DOES NOT HAVE ANY INFRASTRUCTURE TO KEEP T HE MATERIAL IN GODOWN FOR PURCHASES AND SALES. HE ONLY MAKE PURCHA SES ON BEHALF OF CUSTOMERS, WHO NEED HIS HELP. THEREFORE, THE BASIS ON WHICH, THE AO MADE PROFIT IS ON PRESUMPTION AND MAKING ADDITION O N PRESUMPTION IS NOT PROPER, HENCE, THE ADDITION OF RS. 72,345/- IS HEREBY DELETED. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. PRONOUNCED ON 22 ND MARCH, 2011. SD/- SD/- (S.V. MEHROTRA) (V. DU RGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 22 ND MARCH, 2011. COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., JOD HPUR . BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI. KV ITA NO. 175/JU/2010 KUNDAN RAM KIRDOLIYA 7 S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON 01/03/11 SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR 02/03/11 SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER