Radhey Shyam Mantri, MAKRANA V. ITO, MAKRANA

ITA 176/JODH/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9435 (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
• Assessee Lawyers: NONEWRITTEN SUBMISSION
• Keywords: Unexplained investment; Reason to believe
• Section: 147; 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. 176/JU/2010 ASSESSMENT YEAR: 2005-06 RADHEY SHYAM MANTRI, APPELLANT C/O DILEEP KUMAR MATHUR CHARTERED ACOCUNTANTS, STATION ROAD, MAKRANA.. VS. INCOME TAX OFFICER, RESPONDENT WARD-2, MAKRANA APPELLANT BY : NONE(WRITTEN SUBMISSION) RESPONDENT BY : MR. AVADHESH 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 01/01/2010 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. 58,105/- 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A), JODHPUR HAS ERRED IN CONFIRMING THE ADDITION OF RS. 97,062/-. ITA NO. 176/JU/2010 RADHEY SHYAM MANTRI 2 2. AS REGARDS GROUND NO.1 REGARDING REOPENING OF AS SESSMENT, IT IS OBSERVED THAT THE ASSESSEE FILED ORIGINAL RETURN OF INCOME ON 11/11/2005. SUBSEQUENTLY, THE AO HAD INITIATED THE PROCEEDINGS 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. 176/JU/2010 RADHEY SHYAM MANTRI 3 5. AS REGARDS ADDITION OF RS. 58,105/-, THE AO ESTI MATED PROFIT ON ROTATION OF BANK TRANSACTIONS, AND CALCULATED THE NET PROFIT @ 5% ON RS. 11,62,100/-, WHICH ARRIVES AT RS. 58,105/-, BY APPLYING PROVISIONS OF SECTION 44AF OF THE ACT. THE CIT(A) C ONFIRMED THE ACTION OF THE AO. 6. IN THE WRITTEN SUBMISSION FILED BEFORE US, THE A SSESSEE 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. 11,62,100/- . 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. 7. ON THE OTHER HAND, THE LEARNED DR HAS PLACED REL IANCE ON THE ORDERS OF THE REVENUE AUTHORITIES. 8. AFTER HEARING THE LEARNED DR AND PERUSING THE RE CORD, WE ARE OF THE VIEW THAT THERE IS A FORCE IN THE SUBMISSIONS M ADE IN THE WRITTEN 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. 11,62,100/-. 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. 58,105/- IS HEREBY DELETED. 9. AS REGARDS GROUND NO. 3 REGARDING ADDITION OF R S. 97,062/- IT IS OBSERVED THAT THE AO NOTICED FROM THE CHART FURN ISHED BY THE ASSESSEE AND BANK ACCOUNT OF THE ASSESSEE WITH IDBI BANK, THAT THE ASSESSEE HAD DEPOSITED CASH ON VARIOUS DATES FROM D IFFERENT PLACES IN ITA NO. 176/JU/2010 RADHEY SHYAM MANTRI 4 HIS BANK ACCOUNT AT KISHANGARH AND HIS MAXIMUM CRED IT BALANCE (PEAK BALANCE) WAS RS. 97,062/- ON 22/07/04. ACCORD INGLY, THE AO MADE ADDITION OF RS. 97,062/- BY TREATING THE SAME AS UNDISCLOSED INVESTMENT IN BUSINESS. AGGRIEVED THE ASSESSEE CARR IED THE MATTER IN APPEAL BEFORE THE CIT(A). 10. BEFORE THE CIT(A), THE ASSESSEE FILED WRITTEN S UBMISSION WHEREIN HIS CONTENTION WAS THAT THE AO DID NOT PROVIDE OPPO RTUNITY & MADE AN ADDITION OF PEAK AMOUNT OF RS. 97,062/- WHEREAS IN SHOW CAUSE NOTICE THERE WAS NO REFERENCE OF RS. 97,062/- IT WA S FURTHER STATED THAT THE ASSESSEE WAS HAVING CASH BALANCE IN HIS BO OKS OF ACCOUNT. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE CIT(A) CONFIRMED THE ADDITION OBSERVING THAT THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE SUCH AS CONFIRMATION FROM THE DEPOSITO RS TO SUBSTANTIATE HIS CLAIM, THEREFORE, THE AO WAS JUSTIFIED IN TREAT ING THE DEPOSIT AS UNEXPLAINED INVESTMENT OF THE ASSESSEE AND MAKING A DDITION OF THE PEAK AMOUNT OF SUCH DEPOSITS. 11. NONE APPEARED ON BEHALF OF THE ASSESSEE BEFORE US, HOWEVER, WRITTEN SUBMISSION HAS BEEN FILED. IN WRITTEN SUBMI SSION, THE ASSESSEE STATED THAT THE ASSESSEE FIRM IS RUNNING B USINESS SINCE 01/12/1999, HENCE CAPITAL SHOWN IN THE BALANCE SHEE T SHOWS ACCUMULATED CAPITAL BALANCE FROM 01/12/1999 TO 31/0 3/2005 ON THE BASIS OF ESTIMATION OF INVESTMENT OF RS. 4,35,700 I S NOT LOGICAL. IT WAS FURTHER STATED THAT THE AO DID NOT PROVIDE OPPORTUN ITY & MADE ADDITION OF PEAK AMOUNT OF RS. 97,662/- WHEREAS IN SHOW CAUSE NOTICE THERE WAS NOT ANY REFERENCE OF RS. 97,662/-. 12. THE LEARNED DR, ON THE OTHER HAND, HAS RELIED U PON THE ORDERS OF REVENUE AUTHORITIES. 13. WE HAVE HEARD THE LEARNED DR AND PERUSED THE RE LEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT THE ASSESSE E WAS DOING ITA NO. 176/JU/2010 RADHEY SHYAM MANTRI 5 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 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. 97,092/- MADE BY THE AO BY SETT ING ASIDE THE ORDER OF THE CIT(A). 14. 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. ITA NO. 176/JU/2010 RADHEY SHYAM MANTRI 6 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 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