Income Tax Officer Ward -2(2), RAIPUR (CG) V. M/s. Amendra Singh , MAHASAMUND

ITA 193/BIL/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94025 (ITAT-RAIPUR)
• Duration Of Justice: 3 year(s) 8 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 18-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K JAIN
• Keywords: Bogus purchase; Rejection of books of accounts; Business income
• Section: 2

Judgement Text

1 ITA NO.193/BLPR/2011 IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T. A. NO. 193/BLPR/2011 ASSESSMENT YEAR : 2005-06. THE INCOME-TAX OFFICER, M/S AMENDRA SINGH, 2(2), RAIPUR. V/S. VILL. PATEWA, DIST. MAHASAMUND (CG ). PANAAMFA0234E (APPELLANT) RESPONDENT. APPELLANT BY : SHRI D.K. JAIN. RESPONDENT BY : SHRI SUNIL KUMA R AGRAWAL. DATE OF HEARING : 16-06-2015 DATE OF PRONOUNCEMENT : 17 TH JULY, 2015. O R D E R PER SHRI SHAMIN YAHYA, A.M . THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS), RAIPUR DATED 22-07-2011 AND PERTAINS TO ASSESSMENT YEAR 2005-06. THE GROUNDS OF APPEAL READ AS UNDER : 1. WHETHER IN LAW AND ON FACTS & CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS RIGHT IN DELETING THE ADDITION OF ` .4,45,192/- MADE BY THE AO BY REJECTING BOOK RESULTS BY APPLYING NET PROFIT RATE @ 1.5% BY INVOKING PROVISIONS OF SEC. 145. 2 ITA NO.193/BLPR/2011 2. . WHETHER IN LAW AND ON FACTS & CIRCUMSTANCES O F THE CASE, THE CIT(A) WAS RIGHT IN DELETING THE ADDITION OF ` .11,00,499/- MADE BY THE AO ON ACCOUNT OF CAPITAL INTRODUCED BY THE PARTNERS. 2. APROPOS GROUND NO. 1: THE ASSESSEE IN THIS CASE DERIVES INCOME FROM COUNTRY LIQUOR AND IMFL CONTRACTS ALLOTTED BY THE S TATE EXCISE DEPARTMENT. IN THIS CASE THE ASSESSING OFFICER REJECTED THE BOOK RESULT S AND ESTIMATED ADDITION OF ` .4,45,192/- TO THE DECLARED TRADING RESULTS. ACCORD ING TO THE ASSESSING OFFICER, NO SALE BILLS/VOUCHERS NOR STOCK REGISTER WERE MAINTAI NED AND MOST OF THE PETTY EXPENSES INCURRED IN DAY TO DAY COURSE OF BUSINESS AND CLAIMED UNDER DIFFERENT HEADS WERE SUPPORTED BY SELF-MADE VOUCHERS AND THE EXPENSES CLAIMED IN RESPECT OF ELECTRICITY BILLS AND THE VEHICLES/TELEPHONES WE RE QUESTIONABLE SINCE THE SAME WERE NOT IN ASSESSEES NAME. THE ASSESSING OFFICER ALSO NOTED THAT THE OFFICE EXPENSES INCLUDED PETTY AMOUNT OF PENALTIES OF ` .500/- AND ` .2,000/- LEVIED BY THE EXCISE DEPARTMENT. FOR THESE REASONS, THE BOOK RESU LTS WERE REJECTED AND AS AGAINST NP OF 0.4% SHOWN ON TOTAL SALES OF ` .4,11,23,679/-; THE NET PROFIT ESTIMATED WAS 1.5% RESULTING IN THE IMPUGNED ADDITION OF ` .4,45,192/- TO THE DECLARED TRADING RESULTS. 3. UPON ASSESSEES APPEAL, LEARNED CIT(APPEALS) NOT ED THAT NO SUPPRESSION OF SALE NOR INFLATION IN PURCHASE WAS DETECTED BY THE ASSESSING OFFICER. LEARNED CIT(APPEALS) ACCEPTED THE PLEA THAT IT WAS NOT POSS IBLE TO MAINTAIN CASH VOUCHERS FOR DAILY SALES OR LIQUOR EFFECTED AT VARIOUS SHOPS . LEARNED CIT(APPEALS) FURTHER OBSERVED THAT THE ASSESSING OFFICER HAD NOT POINTED OUT THAT THERE WAS ANY EXPENSE WHICH WAS INADMISSIBLE IN NATURE. HENCE THE LEARNED CIT(APPEALS) HELD THAT THERE WAS NO JUSTIFICATION OF REJECTION OF AUDITED BOOK R ESULTS. HENCE LEARNED CIT(APPEALS) DIRECTED THAT THE ADDITION OF ` .4,45,192/- BE DELETED. 3 ITA NO.193/BLPR/2011 4. AGAINST THE ABOVE ORDER, THE REVENUE IS IN APPEA L BEFORE US. 5. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE R ECORDS. WE FIND THAT THE ASSESSEE HAS MAINTAINED PROPER BOOKS OF ACCOUNTS AN D THE RESULTS SUBMITTED WERE DULY SUPPORTED BY AUDITED ACCOUNTS. NO CASE HAS BEE N MADE BY THE ASSESSING OFFICER OF INFLATED SALES OR BOGUS PURCHASES. THE A SSESSING OFFICER HAS ONLY FOUND FAULT WITH THE MAINTENANCE OF SALES VOUCHERS AND SO ME CASH EXPENSES VOUCHERS. IN OUR CONSIDERED OPINION, THE MISTAKES AND IRREGULARI TIES POINTED OUT BY THE ASSESSING OFFICER DO NOT WARRANT REJECTION OF BOOKS OF ACCOUNTS WHICH IS MORE SO WHEN THE ASSESSING OFFICER HAS NOT SPECIFICALLY POI NTED OUT THAT THERE WERE EXPENSES WHICH WERE BOGUS OR NOT ALLOWABLE OR NOT I NCURRED FOR THE PURPOSE OF BUSINESS. UNDER THESE CIRCUMSTANCES, IN OUR CONSIDE RED OPINION, THERE IS NO INFIRMITY IN THE ORDER OF LEARNED CIT(APPEALS) TO H OLD THAT THE REJECTION OF BOOKS WAS NOT JUSTIFIED. BEFORE PARTING WE WOULD LIKE TO ADD THAT ON A TURNOVER OF ` .4,11,23,679/- THE ASSESSEE HAS SHOWN THE INCOME OF ` .50,500/-. IF THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE RETURNED INCOME, HE SHOULD HAVE BROUGHT SOME COGENT MATERIAL ON RECORD TO PROVE THAT THE RESULTS SHOWN BY THE ASSESSEE ARE NOT JUSTIFIED. MERE SUSPICION AND SURMISES CANNOT TAKE PLACE OF PROPER ASSESSMENT. HENCE IN OUR CONSIDERED OPINION THE DELETION OF ADD ITION OF ` .4,45,192/- BY THE LEARNED CIT(APPEALS) IS TO BE UPHELD. 6. APROPOS GROUND NO2: ON THIS ISSUE THE ASSESSING OFFICER NOTED THAT THERE WAS INTRODUCTION OF CAPITAL BY PARTNERS AMOUNTING T O ` .46,12,000/-. THE ASSESSING OFFICER WANTED TO KNOW THE SOURCE OF INVESTMENT BY THE PARTNERS. TWO OF THE PARTNERS AGREED THAT THEY DID NOT HAVE SOURCE OF IN VESTMENT OF ` .7,00,000/- AND ` .3,00,000/- RESPECTIVELY AND THEY AGREED TO OFFER T HE SAME FOR TAXATION. TWO OF THE PARTNERS DID NOT APPEAR. HENCE INVESTMENT MADE BY T HEM AMOUNTING TO ` .50,000/- 4 ITA NO.193/BLPR/2011 AND ` .50,499/- WAS TREATED AS INCOME FROM UNDISCLOSED SO URCES. HENCE THE SUM OF ` .11,00,499/- WAS ADDED AS UNDISCLOSED INCOME OF THE FIRM. 7. BEFORE THE LEARNED CIT(APPEALS) IT WAS SUBMITTED THAT THE PARTNERS WERE PRESSURIZED BY THE ASSESSING OFFICER TO ACCEPT THAT THERE WAS NO SOURCE FOR INVESTMENT. IT WAS ALSO SUBMITTED THAT THERE IS A LIMITATION OF COMPLETION OF ASSESSMENT WAS JUST APPROACHING. PROPER OPPORTUNITY WAS NOT AFFORDED. LEARNED CIT(APPEALS) FURTHER REFERRED TO THE PROPOSITION TH AT THE ASSESSEE IS NOT REQUIRED TO PROVE THE SOURCE OF SOURCE. LEARNED CIT(APPEALS) AL SO REFERRED TO SEVERAL CASE LAWS FOR THE PROPOSITION THAT ONCE IT WAS FOUND THA T SUMS CREDITED IN CAPITAL ACCOUNTS OF THE PARTNERS CAME FROM PARTNERS AND WAS VERIFIABLE FROM THE COPIES OF THE CAPITAL ACCOUNTS, THE SAME CANNOT BE ADDED AS U NDISCLOSED INCOME OF THE FIRM. HENCE LEARNED CIT(APPEALS) DIRECTED THAT THE ADDITI ON IN THIS REGARD IS NOT JUSTIFIED.. 8. THE LEARNED CIT(APPEALS) FURTHER OBSERVED THAT H E HAD REMANDED UNDER RULE 46 CERTAIN PAPERS FOR VERIFICATION OF THE ASSE SSING OFFICER. THE ASSESSING OFFICER EXAMINED THE CONCERNED PERSONS AND SUBMITTE D THAT THE CREDITS OF ` .7,00,000/- AND ` .3,00,000/- RESPECTIVELY APPEARING IN THE BOOKS OF THE FIRM IN THE NAME OF SHRI AMENDRA SINGH AND SHRI VISHWANATH SING H WERE FULLY EXPLAINED. HENCE THE LEARNED CIT(APPEALS) DELETED THIS ADDITIO N OF ` .10,00,000/-. REGARDING THE REMAINING CREDITS OF ` .50,000/- AND ` .50,499/- APPEARING IN THE NAMES OF REMAINING TWO PARTNERS, LEARNED CIT(APPEALS) OBSERV ED THAT THERE WERE RECORD EVIDENCES TO THE FACT THAT THEY HAD EMPLOYED CAPIT AL TO THE EXTENT ABOVE RESPECTIVELY ON 16-03-2005 AND 18-03-2005 AND THAT THE SAME WERE RETURNED BACK TO THEM ON 31-03-2005, WHICH FACT IS EVIDENT FROM THE PARTNERS CAPITAL ACCOUNT APPEARING IN THE AUDITED BOOKS OF THE ASSESSEE FIRM . HENCE LEARNED CIT(APPEALS) DELETED THE ADDITION. 5 ITA NO.193/BLPR/2011 9. AGAINST THE ABOVE ORDER, REVENUE IS IN APPEAL BE FORE US. 10. HAVING HEARD BOTH THE COUNSEL AND PERUSING THE RECORDS, WE FIND THAT IN REMAND PROCEEDINGS THE ASSESSING OFFICER HAS ACCEP TED THAT THE SOURCE OF INVESTMENT TO THE EXTENT OF ` .10 LAKHS DENIED EARLIER HAVE BEEN FOUND TO BE JUSTIFIED. FURTHER MORE, REGARDING FURTHER ADDITION S, LEARNED CIT(APPEALS) HAS FOUND THAT THEY WERE INTRODUCED BY THE PARTNERS AND THE SAME WERE ALSO RETURNED TO THEM. HENCE THERE IS ALSO NO JUSTIFICATION FOR THIS ADDITION. HENCE WE FIND THAT THERE IS NO INFIRMITY IN THE ORDER OF LEARNED CIT(APPEALS ). WE UPHOLD THE SAME. 11. IN THE RESULT, THIS APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 17 TH DAY OF JULY, 2015. SD/- SD/- (MUKUL K. SHRAWAT) ( SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER. DATED: 17 TH JULY, 2015. COPY OF ORDER FORWARDED TO : 1. THE ASSESSEE. 2. REVENUE. 3. THE CIT(A) 4. THE CIT, 5. THE D.R., ITAT, RAIPUR. 6. GUARD FILE. T RUE COPY. BY ORDER WAKODE ASSISTANT REGISTRAR, ITAT, NAGPUR