ITO, Rohtak V. Shri Pawan Khurana, Bahadurgarh

ITA 1922/DEL/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7277 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 23-09-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 19-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEVI SHARAN SINGH
• Keywords: Source of fund
• Section: 143(3); 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER AND SH. B.C.MEENA, ACCOUNTANT MEMBER I.T.A .NO. - 1922/ DEL/201 1 (ASSESSMENT YEAR - 2007 - 08 ) ITO, WARD - 3, ROHTAK (APPELLANT) VS SH. PAWAN KHURANA, 240/16, JATWARA MOHALLA, BAHADURGARH P AN - AHGPK8418D (RESPONDENT) APPELLANT BY SH. DEVI SHARAN SINGH, SR. DR RESPONDENT BY NONE ORDER PER DIVA SINGH, JM TH IS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 1 4 . 0 2 .201 1 OF THE CIT(A), ROHTAK PERTAINING TO 200 7 - 0 8 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN DELETING THE ESTIMATION OF PROFIT @15 % APPLIED BY THE A.O. THE A.O. REJECTED HIS CLAIM FOR VARIOUS EXPENSES BEING CLAIMED PURELY ON ESTIMATE AND HYPOTHETICAL BASIS AND APPLIED A REASONABLE FLAT RATE OF 15% OF GROSS RECEIPTS, AND MADE RIGHTLY AN ADDITION OF RS.320370/ - . 2. ON THE FACTS AND IN TH E CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN THE LAW AND FACTS IN DELETING THE ADDITION OF RS.713600/ - . THE A.O. HOLD THE INVESTMENTS BY WAY OF CASH DEPOSITS ON VARIOUS DATES DURING THE YEAR IN HIS ALLEGED TWO BANK ACCOUNTS TO BE OUT OF HIS UND ISCLOSED SOURCES OF INCOME, WITHIN THE MEANING SECTION 69 OF I.T.ACT AND MADE RIGHTLY AN ADDITION OF RS.713600/ - . 3. THE APPELLANT CRAVES LEAVE TO ADD, DELETE OR AMEND ANY GROUND OR GROUNDS OF APPEAL AT THE TIME HEARING. 2. NO ONE WAS PRESENT AT THE TIME OF HEARING. HOWEVER CONSIDERING THE MATERIAL AVAILABLE ON RECORD IT WAS CONSIDERED APPROPRIATE TO DECIDE THE APPEAL AFTER HEARING THE LD. SR. DR. 2 I.T.A .NO. - 1 9 22 /DEL/201 1 3. THE RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE RETURNED AN INCOME O F RS.1,57,200/ - WHICH WAS SUBJECTED TO SCRUTINY ASSESSMENT AS IT WAS SELECTED UNDER CASS. IN RESPONSE TO NOTICE SENT NO ONE APPEARED ACCORDINGLY THE AO PASSED THE ORDER U/S 144. THE AO THERE IN MADE IN THE ADDITION S OF RS.3,20,370 / - BY APPLYING THE FLAT R ATE OF 15% TO THE GROSS RECEIPTS AND OF RS.7,13,600/ - BY MAKING ADDITION ON THE BASIS OF DEPOSITS IN THE BANK ACCOUNTS WHEREIN SOME OF THE PAYMENTS WERE THROUGH CHEQUE FROM NATIONAL FEDERATION OF THE BLIND 272/7, IIND FLOOR, LITTLE SAGAR BUILDING, PAHAR GA NG, NEW DELHI AS THE BALANCE RECEIPTS WERE FOUND TO HAVE BEEN DEPOSITED THROUGH CASH IN THE TWO SPECIFIC BANK ACCOUNTS. 3.1. IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY IT WAS CONTENDED BY THE ASSESSEE ASSAILING THE ACTION OF THE AO POINTING TO FACTS SO AS TO CONTEND THAT NOTICES HAD BEEN SENT TO THE ADDRESS WHETHER THE ASSESSEE S BUSINESS HAD CLOSED . T HE NOTICE SENT TO THE ADDRESS GIVEN IN THE RETURN WAS CONTENDED AS NOT BEING PROPERLY SERVED AS PER LAW SINCE IT WAS SERVED UPON HIS FATHER AND THE ASSESSEE WAS LI VING SEPARATELY AND MOREOVER THE FATHER WAS NOT AUTHORIZED TO RECEIVE THE NOTICE. THE SAID ARGUMENTS OF THE ASSESSEE WERE NOT ACCEPTED BY THE CIT(A) AS IT WAS HELD THAT IT WAS THE ASSESSEE S DU TY TO INFORM THE CHANGE OF HIS ADDRESS. HOWEVE R THE PLEA OF THE ASSESSEE THAT IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR I.E 2006 - 07 THE AO U/S 143(3) HAD ACCEPTED THE GROSS PROFIT RATE OF 4.19% AND IN T H E YEAR UNDER CONSIDERATION THERE WAS NOTHING AVAILABLE IN THE ASSESSMENT ORDER AS TO WHY AN EST I MATE OF 15% SHOULD BE APPLIED, CONSIDERING THE FACT THAT THE ASSESSEE HAD DISCLOSED A GROSS PROFIT OF 5.22 % . CONSIDERING THESE FACTS THE CIT(A) CAME TO THE FOLLOWING CONCLUSION: - I HAVE CONSIDERED THE ISSUE AND THE SUBMISSIONS MADE BY THE AR. NO REASON/BA SIS HAS BEEN GIVEN BY THE AO IN ESTIMATING THE PROFIT AT 15%. WHEN THE PROFIT RATE OF 4.19% IN THE IMMEDIATELY PRECEDING YEAR WAS ACCEPTED U/S 143(3), THERE IS NO REASON AS TO WHY IT HAS TO BE ESTIMATED AT 15% PARTICULARLY WHEN THE APPELLANT DECLARED PROF IT RATE OF 5.22%. IN VIEW OF THE ABOVE, THE ADDITION MADE BY THE AO OF RS.3,20,370/ - IN THIS REGARD IS DELETED AND THE GROUND OF APPEAL IS ALLOWED. 3 I.T.A .NO. - 1 9 22 /DEL/201 1 3.2. REGARDING THE ADDITION MADE ON THE BASIS OF DEPOSITS IN CASH IN THE SPECIFIC BANK ACCOUNTS OF THE AS SESSEE, THE ASSESSEE ADVANCED THE FOLLOWING ARGUMENTS BEFORE THE CIT(A) : - 4.3. WITH REGARD TO GROUND NO.4 OF APPEAL, THE AR SUBMITTED BEFORE ME THAT THE APPELLANT WAS A SPONSOR OF M/S NATIONAL FEDERATION OF THE BLIND AND USED TO COLLECT DONATIONS ON BEHAL F OF THAT FEDERATION AND THE DONATIONS SO COLLECTED WERE DEPOSITED IN THE BANK A/CS. HE FURNISHED COPIES OF DONATION RECEIPTS ISSUED BY M/S NATIONAL FEDERATION OF THE BLIND IN THE NAME OF THE APPELLANT INDICATING THAT HE IS THE SPONSOR OF THE DONATIONS. T HE AR FURTHER SUBMITTED THAT WHILE THE AO GAVE BENEFIT OF RS.5,00 LACS, THE ENTIRE REMAINING AMOUNT OF RS.71,3,600/ - WAS BROUGHT TO TAX WITHOUT GIVING BENEFIT OF THE WITHDRAWALS IN THE BANK A/C. HE CONTESTED THAT AT BEST PEAK DEPOSIT COULD HAVE BEEN ADDED, WHICH IN THIS CASE NEVER ACCEDED THE FIGURE OF RS.5.00 LACS. 3.3. CONSIDERING THE ARGUMENTS THE CIT(A) CAME TO THE FOLLOWING CONCLUSION: - I HAVE CONSIDERED THE ISSUE AND THE SUBMISSIONS MADE BY THE AR. IT IS APPARENT THAT THE APPELLANT IS ASSOCIATED WITH M/S NATIONAL FEDERATION OF THE BLIND IN COLLECTING DONATIONS FOR THEM A S PER THE EVIDENCE FILED BEFORE ME. CONSIDERING THIS ASPECT, THE ACTION OF THE AO IN BRINGING THE SUM OF RS.713600/ - , BEING UNEXPLA INED CASH DEPOSITS DOES NOT APPEAR TO BE IN ORDER AND INSTEAD PEAK DEPOSIT, AT BEST WOULD HAVE BEEN BROUGHT TO TAX. SINCE THE PEAK DEPOSIT IN THIS CASE IS BELOW RS.5.00 LACS, NO ADDITION ON THIS ACCOUNT WOULD BE REASONABLE AND APPROPRIATE. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, AS DISCUSSED ABOVE, THE ADDITION MADE BY THE AO IS DELETED AND THE GROUND OF APPEAL IS ALLOWED. 3.4. AGAINST THIS RELIEF THE REVENUE IS BEFORE THE TRIBUNAL. THE LD. SR. DR PLACES RELIANCE ON THE ASSESSMENT ORDER. H OWEVER HE WAS UNABLE TO JUSTIFY THE APPLICATION OF GROSS PROFIT RATE OF 15% IN THE FACE OF THE RECORD WHERE IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR AO HAS ACCEPTED TO 4.19% IN THE FACTS WHERE IN THE YEAR UNDER CONSIDERATION G.P OF 5.22% HAS BEEN RE TURNED . SIMILARLY THE FINDING ARRIVED AT QUA THE SECOND ISSUE ALSO WERE NOT ASSAI LED BY ANY ARGUMENT OR EVIDENCE SO AS TO CANVASS THAT A CONTRARY VIEW OUGHT TO BE TAKEN. 4. IN THE AFORE - MENTIONED PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND NO INFIRMITY IN THE IMPUGNED ORDER WHERE THE CIT(A) HAS TAKEN NOTE OF THE FACT THAT THE GROSS PROFIT RATE ACCEPTED IN THE EARLIER ASSESSMENT YEAR WAS 4.19% AND IN THE YEAR UNDER C ONSIDERATION IT IS 5.22%. HOW THE AO HAS CONSIDERED THE APPLICABILITY 4 I.T.A .NO. - 1 9 22 /DEL/201 1 OF 15% IS NOT BORNE OUT FROM THE ASSESSMENT ORDER. SIMILARLY QUA THE SECOND ISSUE THE CIT(A) HAS CONSIDERED PEAK DEPOSIT . NO INFIRMITY ON FACTS AND LAW QUA THE ISSUE HAVE BEEN ADDRESS ED. IN THE AFOREMENTIONED PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE IN THE ABSENCE OF ANY EVIDENCE OR FACT TO THE CONTRARY WE FIND NO INFIRM ITY IN THE CONCLUSION ARRIVED AT I N THE IMPUGNED ORDER. B EING SATISFIED WITH THE REASONING AND FINDING THE DEPA RTMENTAL APPEAL IS DISMISSED. 5. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 1 0 T H OF OCTOBER 2014. S D / - S D / - ( B.C.MEENA ) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 1 0 / 1 0/2014 *AMIT KUMAR/SUBODH KUMAR COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DEL HI