Navkaar Traders, New Delhi V. ITO WARD - 40(5), NEW DELHI

ITA 194/DEL/2020

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2749 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2016-2017
• Appeal Filed On: 09-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C.P. SINGH
• Assessee Lawyers: AAKRITI DHWAN
• Keywords: Income from undisclosed sources
• Section: 154; 44AD; 143(3)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI SMC BENCH, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 194/DEL/2020 [ASSESSMENT YEAR: 2016-17] NAVKAAR TRADERS, VS. ITO, WARD-40(5), 3197, 232, GF, CIVIC CENTRE, CHANDER NAGAR, MINTO ROAD, TRI NAGAR, NEW DELHI 110 002 NEW DELHI 110 035 (PAN: AAFMN4226H) [APPELLANT] [RESPONDENT] ASSESSEE BY: MS. AAKRITI DHWAN, ADVOCATE REVENUE BY : SH. C.P. SINGH, SR. DR. ORDER THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF THE LD. COMMISSIONER OF INCOME TAX [APPEALS-14], NEW DELHI DATED 28.11.2019 PERTAINING TO ASSESSMENT YEAR 2016-17 O N THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION TO THE EXTENT OF RS. 10,00,000/-. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN NOT APPRECIATING THAT THE ENTIRE CASH SALES HAVE BEEN DISCLOSED BY THE APPELLANT U/S. 44AD OF THE INCOME TAX ACT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN NOT APPRECIATING THAT ALL THE 2 CASH SALES WERE BELOW RS. 2,00,000/-, WHICH DOES NOT REQUIRE QUOTING OF PAN. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN NOT APPRECIATING THAT THE ENTIRE SALES INCLUDING THE CASH SALES WERE DULY REPORTED IN THE VAT RETURN AND THE APPELLANT HAD COLLECTED AND DEPOSITED VAT ON THE SAME. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LD. CIT(A) IS BASED ON SURMISES, PRESUMPTIONS AND CONJECTURES AS THE ADDITION TO THE EXTENT OF RS. 10,00,000/- WAS CONFIRMED SOLELY ON THE BASIS OF THE PATTERN OF CASH DEPOSIT FOLLOWED BY THE APPELLANT. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF CASH SALES TO THE EXTENT OF RS. 10,00,000/- DESPITE THE FACT THAT THE PURCHASES DURING THE YEAR HAVE NOT BEEN DISPUTED. 7. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION WITHOUT APPRECIATING THE BANK STATEMENT, BANK BOOK, DETAILS OF CASH DEPOSITED IN THE CURRENT BANK ACCOUNT, ITR, COMPUTATION OF INCOME, STOCK REGISTER, DETAILS OF CASH SALES, VAT RETURN, CREDIT OR CONFIRMATION, CASH SALES BILLS AND OTHER DOCUMENTARY EVIDENCES SUBMITTED BY THE APPELLANT IN SUPPORT. 8. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THAT THE 3 PARTNERSHIP WAS INCORPORATED ON 15.11.2015 AND THE FIRST PURCHASE WAS MADE ON 03.1.2016 THEREBY THERE COULD NOT HAVE BEEN ANY SALES EFFECTED PRIOR TO LAST QUARTER OF 2015-16. 9. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OF THE GROUNDS OF APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE F ILED ITS RETURN OF INCOME ELECTRONICALLY ON 14.02.2017 DECLARING INCOM E OF RS. 39,480/-. SUBSEQUENTLY, THE CASE OF THE ASSESSE E WAS SELECTED UNDER CASS FOR LIMITED SCRUTINY TO EXAMINE THE ISSU E OF 'WHETHER THE CASH DEPOSITS HAS BEEN MADE FROM UNDISCLOSED SO URCES'. THE ASSESSEE WAS ENGAGED IN THE RETAIL TRADING OF JEWEL LERY. DURING THE YEAR UNDER CONSIDERATION, THE AO NOTICED THAT ASSES SEE HAS DEPOSITED CASH, AMOUNTING OF RS. 23,65,264/- IN THE BANK ACCOUNT MAINTAINED WITH YES BANK. STATUTORY NOTICES WERE IS SUED TO ASSESSEE TO FURNISH THE DETAILS OF CASH DEPOSITS IN THE BANK ACCOUNT AND DETAIL OF NAME, ADDRESS AND PAN OF THE PARTIES TO WHOM SALE WAS MADE IN CASH. IN RESPONSE, THE ASSESSEE DID NOT FURNISH ANY DETAIL OF NAME, ADDRESS AND PAN OF THE PARTIES. FUR THER, A FINAL SHOW CAUSE NOTICE DATED 18.12.2018 WAS ISSUED TO SUBSTAN TIATE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE T RANSACTIONS. IN REPLY OF SHOW CAUSE, ASSESSEE SUBMITTED PART SUBMIS SION WHICH WAS NOT FOUND SATISFACTORY ACCORDING TO THE AO AND HE C OMPLETED THE ASSESSMENT AT RS. 24,04,740/- U/S. 143(3) OF THE IN COME TAX ACT, 1961 (IN SHORT ACT) VIDE ORDER DATED 25.12.2018 BY MAKING THE ADDITION OF RS. 23,65,264/- ON ACCOUNT OF UNEXPLAIN ED INCOME FROM UNDISCLOSED SOURCES. AGAINST THE ASSESSMENT ORDER DATED 25.12.2018, ASSESSEE APPEALED BEFORE THE LD. CIT(A) , WHO VIDE HIS IMPUGNED ORDER DATED 28.11.2019 HAS PARTLY ALLOWED THE APPEAL OF 4 THE ASSESSEE BY DIRECTING THE AO TO RESTRICT THE AD DITION AMOUNTING TO RS. 10,00,000/-. AGGRIEVED WITH THE IMPUGNED OR DER, ASSESSEE APPEALED BEFORE THE TRIBUNAL. 3. LD. COUNSEL FOR THE ASSESSEEE SUBMITTED THAT LD. CIT(A) ERRED IN CONFIRMING THE ADDITION TO THE EXTENT OF RS. 10, 00,000/- AND NOT APPRECIATED THAT THE ENTIRE CASH SALES HAVE BEEN DI SCLOSED BY THE APPELLANT U/S. 44AD OF THE INCOME TAX ACT. IT WAS F URTHER SUBMITTED THAT LD. CIT(A) ALSO NOT APPRECIATED THAT ALL THE C ASH SALES WERE BELOW RS. 2,00,000/-, WHICH DOES NOT REQUIRE QUOTIN G OF PAN. IT WAS FURTHER SUBMITTED THAT LD. CIT(A) ERRED IN NOT APPR ECIATING THAT THE ENTIRE SALES INCLUDING THE CASH SALES WERE DULY REP ORTED IN THE VAT RETURN AND THE ASSESSEE HAD COLLECTED AND DEPOSITE D VAT ON THE SAME. IT WAS FURTHER SUBMITTED THAT LD. CIT(A) HAS SUSTAINED THE ADDITION IN DISPUTE ON SURMISES, PRESUMPTIONS AND C ONJECTURES AS THE ADDITION TO THE EXTENT OF RS. 10,00,000/- WAS C ONFIRMED SOLELY ON THE BASIS OF THE PATTERN OF CASH DEPOSIT FOLLOWE D BY THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF CASH SALES TO THE EXTENT OF RS. 10,00,0 00/- DESPITE THE FACT THAT THE PURCHASES DURING THE YEAR HAVE NOT BE EN DISPUTED. IT WAS FURTHER SUBMITTED THAT LD. CIT(A) HAS WRONGLY C ONFIRMED THE ADDITION IN DISPUTE WITHOUT APPRECIATING THE BANK S TATEMENT, BANK BOOK, DETAILS OF CASH DEPOSITED IN THE CURRENT BANK ACCOUNT, ITR, COMPUTATION OF INCOME, STOCK REGISTER, DETAILS OF C ASH SALES, VAT RETURN, CREDITOR CONFIRMATION, CASH SALES BILLS AND OTHER DOCUMENTARY EVIDENCES SUBMITTED BY THE APPELLANT IN SUPPORT. IT WAS THE FURTHER SUBMISSION THAT LD. CIT(A) HAS ERRED IN NOT APPREC IATING THAT THE PARTNERSHIP WAS INCORPORATED ON 15.11.2015 AND THE FIRST PURCHASE WAS MADE ON 03.1.2016 THEREBY THERE COULD NOT HAVE BEEN ANY SALES EFFECTED PRIOR TO LAST QUARTER OF 2015-16. IN SUPPORT OF HER 5 CONTENTION, LD. COUNSEL FOR THE ASSESSEE FILED A PAPER BOOK CONTAINING PAGES 1-72 HAVING VARIOUS DOCUMENTARY EV IDENCES ALREADY FILED BEFORE THE LOWER AUTHORITIES. IN VIEW OF THE ABOVE, SHE REQUESTED THAT THE ADDITION SUSTAINED BY THE LD. C IT(A) MAY BE DELETED AND APPEAL OF THE ASSESSEE MAY BE ALLOWED. 4. ON THE CONTRARY, LD. DR RELIED UPON THE ORDERS PASSED BY THE REVENUE AUTHORITIES. 5. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS ESPECIALLY THE ORDERS OF THE AUTHORITIES BELOW AND THE SUBMISS IONS AND THE PAPER BOOK CONTAINING PAGES 1-72 IN WHICH THE ASSES SEE HAS ATTACHED THE COPY OF ASSESSMENT ORDER DATED 25.12.2 018 FOR AY 2016-17 ALONGWITH NOTICE OF DEMAND AND RECTIFICATIO N REQUEST UNDER SECTION 154 OF THE ACT; COPY OF THE ORDER DATED 28. 11.2019 PASSED BY THE LD. CIT(A)-14, NEW DELHI; COPY OF THE ITR AN D COMPUTATION FOR AY 2016-17; COPY OF BANK STATEMENT; BANK BOOK; DETAILS OF CASH DEPOSITED IN BANK; PURCHASE DETAILS; CREDIT CONFIRM ATION; VAT RETURN; VAT SURRENDER CERTIFICATE; CASH SALES BILLS AND STOCK REGISTER. I NOTE THAT THE ENTIRE CASH SALES HAVE BE EN DISCLOSED BY THE ASSESSEE U/S. 44AD OF THE INCOME TAX ACT WHERE THE ASSESSEE HAS SHOWN GROSS RECEIPTS OF RS. 46,58,849/- INCLUDI NG CASH SALE OF RS. 23,65,264/-. IT IS ALSO NOTED THAT THE ENTIRE SALES INCLUDING THE CASH SALES WERE DULY REPORTED IN THE VAT RETURN AND THE ASSESSEE HAD COLLECTED AND DEPOSITED VAT ON THE SAME. HOWEVE R, THE LD. CIT(A) SUSTAINED THE ADDITION SOLELY ON THE BASIS O F THE PATTERN OF CASH DEPOSIT FOLLOWED BY THE ASSESSEE. IT IS FURTHE R NOTICED THAT CASH SALES TO THE EXTENT OF RS. 10,00,000/- DURING THE Y EAR HAVE NOT BEEN DISPUTED, HOWEVER, LD. CIT(A) HAS NOT PROPERLY APPRECIATED THE BANK STATEMENT, BANK BOOK, DETAILS OF CASH DEPO SITED IN THE CURRENT BANK ACCOUNT, ITR, COMPUTATION OF INCOME, S TOCK REGISTER, 6 DETAILS OF CASH SALES, VAT RETURN, CREDITOR CONFIRM ATION, CASH SALES BILLS AND OTHER DOCUMENTARY EVIDENCES SUBMITTED BY THE ASSESSEE. IN VIEW OF ABOVE, I AM OF THE CONSIDERED OPINION TH AT ASSESSEE HAS FULLY DISCHARGED ITS ONUS AND PROVE THE IDENTITY, C REDITWORTHINESS AND GENUINENESS OF TRANSACTION BY PROVIDING SUFFIC IENT DOCUMENTARY EVIDENCES AND DESPITE THAT LD. CIT(A) HAS ONLY GIV EN PARTLY RELIEF AND RESTRICT THE ADDITION TO THE TUNE OF RS. 10,00 ,000/-, WHICH IS NOT TENABLE IN LAW AND IN VIEW OF THE FACTS AND CI RCUMSTANCES OF THE CASE, HENCE, THE SAME NEEDS TO BE DELETED. THEREFOR E, I HOLD AND DIRECT ACCORDINGLY AND ALLOW THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. THE ORDER PRONOUNCED ON 17.03.2020. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATED:17-03-2020 SRB COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) ASST. REGISTRAR, 5. DR ITAT, NEW DELHI