The ITO, Ward-9(2), Surat V. Shri Indrajeet Zandusing Tomar, Surat

ITA 1926/AHD/2011

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8634 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 08-01-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 03-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Assessee Lawyers: HARDIK VORA A R
• Keywords: Gross profit estimation; Peak credit

Judgement Text

, , , , B, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, B BENCH . .. . . .. . , !' !' !' !', , , , #$ %&'( #$ %&'( #$ %&'( #$ %&'(, , , , )* + ) ' )* + ) ' )* + ) ' )* + ) ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND ANIL CHATURVEDI, ACCOUNTANT MEMBER) ITA NO.1926/AHD/2011 [ASSTT.YEAR : 2008-2009] ITO, WARD-9(2) SURAT. /VS. SHRI INDRAJEET ZANDUSING TOMAR R-102, ROHIT A/C MARKET RING ROAD, SURAT. PAN : AAMPT 5768 L ( (( ( -. -. -. -. / APPELLANT) ( (( ( /0-. /0-. /0-. /0-. / RESPONDENT) + 1 2 ) / REVENUE BY : SHRI V.K. SINGH, SR.DR 4& 1 2 ) / ASSESSEE BY : SHRI HARDIK VORA, AR 5 1 &(* / DATE OF HEARING : 8 TH JANUARY, 2015 678 1 &(* / DATE OF PRONOUNCEMENT : 02-02-2015 )9 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THIS APPEAL BY THE REVENUE FOR THE ASSTT.YEAR 2008-2009 IS DIRECTED AGAINST TH E ORDER OF THE CIT(A). 2. THE GROUND NO.1 OF THE APPEAL OF THE REVENUE IS AS UNDER: 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE A ND IN LAW THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.1,3 4,836/- ON ACCOUNT OF LOW GP. 3. THE LEARNED DR SUBMITTED THAT THERE IS A FALL IN GP OF THE ASSESSEE WHICH THE ASSESSEE COULD NOT EXPLAIN, AND THEREFORE , THE ADDITION MADE AT ITA NO.1926/AHD/2011 -2- 1% OF THE TURNOVER OF THE ASSESSEE AT RS.1,34,836/- WAS QUITE JUSTIFIED. HE SUBMITTED THAT THE GP SHOWN BY THE ASSESSEE FOR THE RELEVANT YEAR WAS 6.96% IN SARI AND DRESS MATERIAL BUSINESS, WHICH WERE ON THE LOW ER SIDE. HE REFERRED TO THE RELEVANT PORTIONS OF THE ASSESSM ENT ORDER IN SUPPORT OF THE CASE OF THE REVENUE. THE LEARNED COUNSEL FOR T HE ASSESSEE HAS OPPOSED THE SUBMISSIONS OF THE LEARNED DR. HE SUBMITTED TH AT THE ASSESSEE HAS STARTED A NEW PROPRIETARY CONCERN BY THE NAME RAKE SH FASHION , AND THERE WAS PRACTICALLY NO BUSINESS IN THIS CONCERN I N THE EARLIER YEAR. HE SUBMITTED THAT THERE WAS A STOCK TRANSFER WORTH RS. 22.39 LAKHS IN RESPECT OF DEAD STOCK FROM OLD CONCERN TO THE NEW CONCERN, AND THEREFORE, THERE WAS HARDLY ANY FALL IN THE GP AS COMPARED TO THE EARLIE R YEAR. 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THE CIT(A) HAS PAS SED A WELL REASONED SPEAKING ORDER ON THIS ISSUE. IT IS UNDISPUTED FAC T THAT THE ASSESSEE HAS STARTED NEW PROPRIETARY CONCERN BY THE NAME RAKESH FASHION TO DEAL IN LOW- END SARI , AND THERE WAS NO BUSINESS IN THIS CONCERN IN THE EARLIER YEAR. MOREOVER, THERE WAS A STOCK TRANSFER OF RS.22.39 LA KHS IN RESPECT OF DEAD STOCK FROM OLD CONCERN TO THE NEW CONCERN. THE FAL L IN GP WAS MARGINAL AND NO SPECIFIC DEFECT COULD BE POINTED BY THE AO I N THE ACCOUNT BOOKS OF THE ASSESSEE. IN THESE FACTS, WE ARE OF THE VIEW T HAT THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.1,34,836/- ON ACCOUNT OF LOW GP AND THE GROUND NO.1 OF THE REVENUE IS DISMISSED. 5. THE GROUND NO.2 OF THE REVENUES APPEAL IS AS UN DER: 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE AO OF RS.2,46,75,333/-.: ITA NO.1926/AHD/2011 -3- (A) DESPITE THE FACT THAT ASSESSEE FAILED TO EXPLAIN TH E SOURCE OF THE CREDIT MADE IN THE TWO UNDISCLOSED BANK A/C. (B) HOLDING THAT CASH DEPOSITS MADE IN UNACCOUNTED BANK ACCOUNTS BY THE OUT OF STATES CUSTOMERS DESPITE THE FACT THAT THE ASSESSEE FAILED TO FURNISH ANY DOCUMENTARY EVID ENCE IN SUPPORT OF HIS CLAIM. (C) ACCEPTING FRESH EVIDENCE REGARDING CASH DEPOSITS FI LED IN THE APPELLATE PROCEEDINGS WITHOUT CALLING REMAND RE PORT, THEREBY VIOLATING THE PROVISION OF RULE 46A OF THE IT RULES, 1962. 6. THE LEARNED DR SUBMITTED THAT THE CIT(A) HAS DEL ETED THE ADDITION OF RS.2.46 CRORES WHICH REPRESENTS TRANSACTION IN T WO UNDISCLOSED BANK ACCOUNTS OF THE ASSESSEE, AND THEREFORE, THE AGGREG ATE OF THESE BANK ACCOUNTS SHOULD HAVE BEEN ADDED AS INCOME IN THE HA NDS OF THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CIT(A) HAS ALREADY CONFIRMED THE ADDITION OF RS.22,58,223/- WHICH REPR ESENTS THE PEAK AMOUNT OF BOTH THE UNDISCLOSED BANK ACCOUNTS COMBIN ED TOGETHER OUT OF THE TOTAL ADDITION OF RS.2.46 CRORES, AND THEREFORE , THERE IS NO MERIT IN THE GROUNDS OF THE REVENUE. HE RELIED ON THE ORDER OF THE CIT(A). 7. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AO AND THE CIT(A) ON THIS ISSUE. WE FIND THAT THE CIT(A) HAS PASSED A DETAILED ORDER ON THIS ISSUE. THE ADMITTED FACT IS THAT THE TWO BANK ACCOUNTS OF THE ASSESSEE WITH AXIS BANK AND ICICI B ANK LTD. WERE NOT DISCLOSED TO THE DEPARTMENT. HOWEVER, THE LEGAL PO SITION ON THIS ISSUE IS WELL SETTLED THAT ONLY THE PEAK AMOUNT IN SUCH TYPE OF CASE COULD BE ADDED AS INCOME IN THE HANDS OF THE ASSESSEE AND NOT AGGR EGATE OF THE TOTAL CREDIT SIDE OF THE ACCOUNT. IN THIS CASE, THE CIT(A) HAS RECORDED THAT THE PEAK AMOUNT OF TWO BANK ACCOUNTS WITH AXIS BANK AND ICIC I BANK LTD. TAKEN TOGETHER COMES TO RS.22,58,223/-, AND THE SAME HAS BEEN CONFIRMED AS INCOME IN THE HANDS OF THE ASSESSEE AND THE BALANCE ADDITION HAS BEEN ITA NO.1926/AHD/2011 -4- DELETED. THE REVENUE COULD NOT CONTROVERT THIS FIN DING OF THE CIT(A) THAT THE PEAK BALANCE IN THESE TWO UNDISCLOSED BANK ACCO UNTS OF THE ASSESSEE HAS BEEN RIGHTLY CALCULATED AT RS.22,58,223/-. IN THESE FACTS OF THE CASE, WE ARE OF THE VIEW THAT NO INTERFERENCE IN THE ORDER O F THE CIT(A) IS CALLED FOR, AND THE GROUND NO.2 OF THE REVENUE IS DISMISSED. 8. THE GROUND NO.3 OF THE REVENUE IS AS UNDER: 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS .11,51,810/- MADE ON ACCOUNT OF UNACCOUNTED CLOSING BANK BALANCE. 9. THE LEARNED DR SUBMITTED THAT THE ADDITION OF RS .11.51 LAKHS WERE MADE ON ACCOUNT OF CLOSING BANK BALANCE IN THESE TW O UNDISCLOSED BANK ACCOUNTS OF THE ASSESSEE WITH AXIS BANK AND ICICI B ANK LTD. AND THE ADDITION HAS BEEN WRONGLY DELETED BY THE CIT(A). H E REFERRED TO RELEVANT PORTIONS OF THE ASSESSMENT ORDER IN SUPPORT OF THE CASE OF THE REVENUE. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PEAK AMOUNT IN TWO UNDISCLOSED BANK ACCOUNTS HAS ALREADY BEEN ASSE SSED AS INCOME IN THE HANDS OF THE ASSESSEE BY THE CIT(A), AND THEREFORE, NO SEPARATE ADDITION FOR CLOSING BALANCE IN THESE TWO ACCOUNTS SHOULD BE MADE. THE PEAK BALANCE IN THESE TWO UNDISCLOSED BANK ACCOUNTS ADDE D AS INCOME INCLUDES THE CLOSING BALANCES AS ON THE LAST DATE OF THE ACC OUNTING PERIOD. 10. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THE PEAK AMOUNT IN THESE TWO UNDISCLOSED BANK ACCOUNTS WITH AXIS BANK AND ICICI BANK LTD. HAS BEEN WORKED OUT AT RS.22,58,223/- WHICH HAS BEEN DIRECTE D BY THE CIT(A) TO ASSESS IN THE HANDS OF THE ASSESSEE, AND THEREFORE, THERE IS NO JUSTIFICATION FOR SEPARATE ADDITION OF THE CLOSING BALANCE AS ON THE LAST DATE OF THE RELEVANT PERIOD IN THESE BANK ACCOUNTS OF THE ASSES SEE. THE PEAK BALANCE ITA NO.1926/AHD/2011 -5- IN THESE BANK ACCOUNTS OF THE ASSESSEE WOULD ALWAYS BE HIGHER THAN THE CLOSING BALANCE IN THE SAME BANK ACCOUNTS, AND THER EFORE, SINCE THE HIGHER AMOUNT HAS ALREADY BEEN ASSESSED TO TAX IN THESE BA NK ACCOUNTS, NO SEPARATE ADDITION FOR CLOSING BALANCE IN THESE BANK ACCOUNTS OF THE ASSESSEE IS JUSTIFIED. IN THIS VIEW OF THE MATTER, THE ORDE R OF THE CIT(A) ON THIS ISSUE IS CONFIRMED AND THE GROUND NO.3 OF THE REVEN UE IS DISMISSED. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %&'( %&'( %&'( %&'( / ANIL CHATURVEDI) )* + )* + )* + )* + /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD