Smt. Ami Naimesh Desai, Surat V. The Income tax Officer,Ward-3(2), Surat

ITA 1863/AHD/2011

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9352 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 18-01-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 26-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M K PATEL
• Keywords: Unexplained cash credit; Unexplained investment; Third party statement
• Section: 68; 69; 145

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD . . , , BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO.1863/AHD/2011 ( / ASSESSMENT YEAR :2007-08) SMT. AMI NAIMESH DESAI PROP. OF ADITYA COMMERCIAL CORPORATION 1, JIVAN VIHAR SOCIETY OPP. NAVYUG COLLEGE, RANDER ROAD, SURAT / VS. I.T.O. WARD-3(2), ROOM NO. 208, AAYKAR BHAVAN, MAJURA GATE, SURAT. ./ ./ PAN/GIR NO. : ABCPD 8692 E ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI M.K. PATEL, A.R. / RESPONDENT BY : SHRI MADHUSUDAN, SR. D.R. / DATE OF HEARING 18/01/2017 / DATE OF PRONOUNCEMENT 20/01/2017 / O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-II, SURAT, DATED 02/06/2011 FOR THE ASSESSMENT YEAR (AY) 2007-08. ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: (I). ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED CIT(A)-II, SURAT ERRED IN CONFIRMING THE ADDITION OF RS.51,09,481/- MADE BY THE A.O. TREATING IT AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE INCOME-TAX ACT. ITA NO. 1863/AHD/2011 SMT. AMI NAIMESH DESAI VS. ITO ASST.YEAR 2007-08 - 2 - (II). ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED CIT(A)-II, SURAT OUGHT TO HAVE CONSIDERED THE SUBMISSIONS MADE BEFORE HIM FAVOURABLY. (III) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LD. CIT(A)-II, SURAT OUGHT TO HAVE CONSIDERED THAT IN DRAFT DISCOUNTING BUSINESS, THE CREDITORS GETS SQUARED UP WITHIN A SPAN OF 3-4 DAYS AND THEREFORE ADDITION U/S.68 MADE BY THE A.O. CANNOT BE SUSTAINED. 2. THE FACTS OF THE CASE ARE ON GOING THROUGH THE RETURN OF INCOME FILED BY THE ASSESSEE IN ITR 4, IT IS NOTICED THAT THE ASSESSEE HAS SHOWN A TOTAL NET PROFIT OF RS.1,22,413/- ON A TOTAL COMMISSION RECEIPT OF RS.360854/- FROM THE BUSINESS OF PROVIDING BANKING SERVICES DURING THE YEAR UNDER CONSIDERATION THEREBY RESULTING IN NP RATIO OF 33.92%. 3. THE ASSESSEE MAINTAINS HER BANK ACCOUNT WITH SURAT NAGARIK SAHAKARI BANK, BHAGAL BRANCH, SURAT. COPIES OF BANK STATEMENTS FOR THE YEAR 2006-07 WERE FURNISHED AND FILED ON RECORDS. 4. THE ASSESSEE ALSO FURNISHED A COPY OF CAPITAL A/C. DURING THE COURSE OF ASSESSMENT PROCEEDINGS. ON VERIFICATION OF THE SAME, IT IS NOTICED THAT THE ASSESSEE HAS SHOWN HIS WITHDRAWAL TOWARDS THE HOUSE HOLD EXPENSES AT RS.48,000/- WHICH IS FOUND AND OTHER RELATED EXPENSES OF HOUSEHOLD, THE EXPENSES SHOWN BY THE ASSESSEE IS FOUND TO BE INSUFFICIENT, AND HENCE A LUMP-SUM AMOUNT OF RS.50,000/- IS MADE TO THE TOTAL INCOME. ACCORDINGLY, A LUMP-SUM AMOUNT OF RS.50,000/- IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF LOW HOUSEHOLD EXPENSES. ITA NO. 1863/AHD/2011 SMT. AMI NAIMESH DESAI VS. ITO ASST.YEAR 2007-08 - 3 - 5. ON VERIFICATION OF RECORD, IT WAS NOTICED THAT THE ASSESSEE HAS SHOWN AN AMOUNT OF RS.51,40,481/- AS SUNDRY CREDITORS OUTSTANDING AS ON 31.03.2007. THE ASSESSEE VIDE PARA 16 OF THE QUESTIONNAIRE ISSUED ON 28.05.2009 WAS ASKED TO FURNISH THE CONFIRMATION AND CONTRA CONFIRMATIONS OF ALL THE CREDITORS WITH NAMES, ADDRESS PAN AND COPY OF LEDGER ACCOUNT, CONTRA ACCOUNT AND BANK A/C INCLUDING SQUARED UP ACCOUNTS. HOWEVER, THE ASSESSEE HAS NOT FURNISHED ANY DETAILS REGARDING THE CREDITORS IN ANY OF HER SUBMISSIONS BEFORE THE LD. A.O. BUT ASSESSEE HAS FILED FOLLOWING DETAILS (I) DATE OF DEPOSIT, (II) AMOUNT, (III) CHEQUE NO., (IV) BANK, (V) NAME, (VI) DATE, (VII) DATE OF RECEIPT RECEIVED BY THE ASSESSEE AND ASSESSEE ALSO FILED A DETAIL REPLY WITH SEVERAL JUDGMENT AND SAME COULD NOT CONVINCE, HENCE LD. A.R. MADE ADDITION/DISALLOWANCES OF RS.1,44,500/- ON ACCOUNT OF HOUSE HOLD OF RS.51,40,481/- WAS TREATED AS UNEXPLAINED CASH CREDIT. 6. AGAINST THE SAID ORDER, ASSESSEE/APPELLANT PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A), WHO PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 7. AGAINST THE SAID ORDER NOW ASSESSEE IS BEFORE US, WE HAVE HEARD THE BOTH PARTIES AND GONE THROUGH THE IMPUGNED ORDERS AND LD. A.R. SHRI M.K. PATEL HAS FILED A DETAIL PAPER BOOK CONTAINING SEVERAL JUDGMENTS AND PAPER FILED BEFORE THE AUTHORITIES BELOW AND IN THIS CASE ASSESSEE RELY ON ONE OF THE IDENTICAL CASE IN UMESH CHANDRA GARG VS. ACIT REPORTED IN (2004) 91 TTJ (AGRA) 549 WHEREBY THE BUSINESS WAS OF DRAFT DISCOUNTING ITA NO. 1863/AHD/2011 SMT. AMI NAIMESH DESAI VS. ITO ASST.YEAR 2007-08 - 4 - AND THE LEARNING ASSESSING OFFICER INVOKED PROVISION OF SECTION 145 AND APPLIED NET PROFIT RATE ON THE TECHNICAL GROUND THAT ASSESSEE DID NOT MAINTAIN BOOKS OF ACCOUNTS. THERE WAS NO FINDING OF THE A.O. THAT FROM THE DETAILS MAINTAINED BY THE ASSESSEE IT WAS NOT POSSIBLE TO DEDUCE THE CORRECT INCOME AND THEREFORE ADDITION MADE ON THAT ACCOUNT WAS DELETED. FURTHER, IN THAT CASE, RELIANCE WAS ALSO PLACED IN CASE OF C.K. TELANG V/S. ACIT IN ITA NO.4538/DEL/1993, WHERE, IN THAT CASE THE LEARNED ASSESSING OFFICER MADE ADDITION UNDER SECTION 69 OF THE ACT FOR THE PEAK AMOUNT OF THE DEPOSITS IN THE BANK ACCOUNT AS UNEXPLAINED INVESTMENTS. THE SAME WAS DELETED ON THE GROUND THAT MERELY BECAUSE THE NAMES AND ADDRESSES OF THE PURCHASERS OF THE OUT STATIONS DRAFT WAS NOT MENTIONED, DOES NOT AUTOMATICALLY LEAD TO A CONCLUSION THAT THE DEPOSITS IN THE BANK ACCOUNT OF THE ASSESSEE WERE THE UNDISCLOSED INVESTMENTS MADE BY THE ASSESSEE. IN THE CASE OF THE ASSESSEE, SUMMARY OF DEPOSITS AND WITHDRAWALS WAS AVAILABLE AND THE COMMISSION INCOME CAN BE DEDUCED WHICH HAS BEEN ACCEPTED BY THE AO. FURTHER, IN THE CASE OF THE ASSESSEE, THE LEARNED AO MADE ADDITION U/S. 68 ON THE SAME FOOTING AS MADE IN THE CASE OF C.K. TELANG V/S. ACIT, THOUGH NAMES OF THE PARTIES ARE FILED BUT IN ABSENCE OF THEIR ADDRESSES AND CONFIRMATION, THE SAME IS TREATED AS UNEXPLAINED CASH CREDIT. 8. IN ADDITION TO ABOVE, THE ASSESSEE FURTHER SUBMITS THAT THE CONCERNED ACCOUNTANT WHILE WRITING THE BOOKS OF ACCOUNTS LOST THE CHEQUE BOOK OF THE ASSESSEE FOR THE PERIOD STARING FORM 15/03/2007 TO 31/03/2007 (LAST 15 DAYS) OF THE ACCOUNTING YEAR AND THEREFORE THE ENTRIES ITA NO. 1863/AHD/2011 SMT. AMI NAIMESH DESAI VS. ITO ASST.YEAR 2007-08 - 5 - IN RESPECT OF CASH WITHDRAWALS OF RS.32,70,000/- FROM THE SAID CHEQUE BOOK AS WELL AS BANK CHARGES OF RS.3,265/- WAS REMAINED TO BE INCORPORATED IN THE BANK BOOK LYING WITH BANK OF BARODA A/C. NO.3784, WHICH IN FACT WAS INCORPORATED ON 01/04/2007. IT IS WORTHWHILE TO MENTIONING THAT THE ACCOUNTANT ENTERED THE ENTRIES RELATING TO THE SLIP BOOK I.E. DRAFT DEPOSITED TILL THE LAST DAY OF THE ACCOUNTING YEAR. THE COPY OF LEDGER ACCOUNT REFLECTING THE SAID ENTRIES PASSED BY THE ACCOUNTANT AS ON 01/04/2007 US SUBMITTED. 9. SIMILARLY, THE REPAYMENT TO SUNDRY CREDITORS TO THE TUNE OF RS.32,70,000/- WAS ALSO REMAINED TO BE INCORPORATED IN ABSENCE OF ENTRIES OF CASH WITHDRAWALS FROM THE SAID BANK ACCOUNT AS EXPLAINED ABOVE. IN THE FACTS AND CIRCUMSTANCES, THE ASSESSEE SUBMITS THE REVISED BALANCE SHEET AFTER INCORPORATING THE ACTUAL DATA OF CASH WITHDRAWALS AND REPAYMENT TO SUNDRY CREDITORS UPTO 31/03/2007 FOR ARRIVING AT TRUE AND CORRECT PICTURE OF THE BOOKS OF ACCOUTS AS ON 31/03/2007. 10. ON GOING THROUGH THE REVISED BALANCE-SHEET, THE AMOUNT LYING UNDER THE HEAD SUNDRY CREDITORS IS ONLY RS.18,70,842/- [RS.51,40,582 RS.32,70,000/-] AND NOT RS.51,40,582/- AS SHOWN EARLIER AND THE AMOUNT LYING UNDER THE HEAD B.O.B. (C/A-3784) IS ONLY RS.13,265/- [RS.32,86,530-RS.32,70,000-RS.3,265] AND NOT RS.32,86,530/-. 11. IN THE CASE OF SREELEKHA BANERJEE VS. CIT, IF THE EXPLANATIONS GIVEN BY THE ASSESSEE SHOW THAT THE RECEIPT IS NOT OF INCOME NATURE, THE ITA NO. 1863/AHD/2011 SMT. AMI NAIMESH DESAI VS. ITO ASST.YEAR 2007-08 - 6 - DEPARTMENT CANNOT CONVERT GOOD PROOF INFO NO PROOF OR OTHERWISE ACT UNREASONABLY AND REJECT IT. ON THE OTHER HAND, IF THE EXPLANATIONS IS UNCONVINCING, THE SAME MAY BE REJECTED AND AN INFERENCE DRAWN THAT THE AMOUNT REPRESENTS UNDISCLOSED INCOME EITHER FROM A DISCLOSED OR AN UNDISCLOSED SOURCE. 12. ON ACCOUNT OF FOREGOING OBSERVATION, WE SEND MATTER BACK TO THE FILE OF THE A.O., WHO WILL VERIFY THE DETAILS WITH REGARD TO RS.18,70,842/- AND ASSESSEE WILL PROVIDE HIM ALL THE DETAILS PERTAINING TO CREDITORS OF RS. 18,70,842/-. 13. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 20/01/2017 SD/- SD/- . . ( ) ( ) ( N.K. BILLAIYA ) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 20/01/2017 TRUE COPY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-II, SURAT 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD