Sri Mahadev Ramaiah, Bengaluru V. Income Tax Officer Ward - 6 (6), Bengaluru

ITA 1996/BANG/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7717 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 12-06-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S VENKATESH
• Keywords: Business income
• Section: 44AD; 234B; 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-A BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO. 19 9 6 / BANG/201 8 ASSESSMENT YEAR : 20 06 - 07 SRI MAHADEV RAMAIAH, KALAPPA REDDY ROAD, JAKKUR POST, AGRAHARA LAYOUT, BANGALORE 560 064. PAN: AEZPM8851Q VS. THE INCOME TAX OFFICER, WARD 6 [2], BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI RAVI SHANKAR, ADVOCATE RESPONDENT BY : SHRI S. VENKATESH, JCIT (DR) DATE OF HEARING : 0 5 .0 7 .2018 DATE OF PRONOUNCEMENT : 13 .0 7 .2018 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE WHICH IS DIREC TED AGAINST THE ORDER OF LD. CIT(A)-14, BANGALORE DATED 12.03.2018 FOR ASSES SMENT YEAR 2006-07. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME- TAX [APPEALS] PASSED UNDER SECTION 250 OF THE ACT IN SO FAR AS IT IS AGAINST THE APPELLANT IS OPPOSED TO LAW, WEIGHT OF EVIDENCE, PR OBABILITIES, FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE. 2. THE APPELLANT DENIES HIMSELF LIABLE TO BE TAXED OVER AND ABOVE THE INCOME RETURNED BY THE APPELLANT OF RS. 1,05,110/-, UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE LEARNED CIT(A) WAS NOT JUSTIFIED IN LAW IN H OLDING THAT ASSESSMENT MADE UNDER SECTION 144 OF THE ACT IS VAL ID, THEREBY CONFIRMING THE CASH DEPOSITS IN TO BANK OF RS. 17,9 0,350/- AS INCOME IN THE HANDS OF THE APPELLANT, ON THE FACTS AND CIR CUMSTANCES OF THE CASE. 4. THE LEARNED CIT(A) WAS NOT JUSTIFIED IN APPRECIA TING THAT THE ORDER ITA NO.1996/BANG/2018 PAGE 2 OF 4 OF ASSESSMENT WAS PASSED U/S 144 OF THE ACT, WITHOU T PROVIDING THE PROPOSAL ORDER TO THE APPELLANT TO ENABLE HIM TO FI LE OBJECTIONS, ON THE FACTS AND CIRCUMSTANCE OF THE CASE. 5. THE LEARNED CIT(A) WAS NOT JUSTIFIED IN FACT, IN NOT APPRECIATING THAT THE APPELLANT HAS NOT MAINTAINED BOOKS OF ACCO UNTS AND HENCE THE BANK ACCOUNT OF THE APPELLANT COULD NOT BE CONSIDER ED AS BOOKS OF ACCOUNT, ON THE FACTS AND CIRCUMSTANCES OF THE CASE . 6. THE LEARNED CIT(A) WAS NOT JUSTIFIED IN LAW AND ON FACTS, IN NOT APPRECIATING THAT THE PROVISIONS OF SECTION 68 ARE NOT ATTRACTED IN THE PRESENT SET OF FACTS AS THE APPELLANT HAS NOT MAINT AINED BOOKS OF ACCOUNTS, ON THE FACTS AND CIRCUMSTANCES OF THE CAS E. 7. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE APPELLANT WAS IN THE BUSINESS OF WEAVING, A COTTAGE INDUSTRY, AND TH E TRANSACTIONS WERE PRIMARILY IN CASH AS WAS THE NATURE OF THE INDUSTRY , AND THE SAME CONSTITUTED THE TRADE RECEIPTS AND COULD NOT BE CON SIDERED COMPLETELY AS INCOME IN THE HANDS OF THE APPELLANT, ON THE FAC TS AND CIRCUMSTANCES OF THE CASE. 8. WITHOUT PREJUDICE, THE CASH DEPOSITED INTO THE B ANK ACCOUNT CONSTITUTED THE GROSS RECEIPTS OF THE APPELLANT AND THE LABOUR CHARGES ALONE OUGHT TO HAVE BEEN CONSIDERED AS INCOME, ON T HE FACTS AND CIRCUMSTANCES OF THE CASE. 9. WITHOUT FURTHER PREJUDICE, THE AUTHORITIES BELOW OUGHT TO HAVE COMPUTED THE INCOME AT 8% OF GROSS CASH DEPOSITS, U NDER SECTION 44AD OF THE ACT, SINCE THE APPELLANT HAS NOT MAINTA INED BOOKS OF ACCOUNTS, ON THE FACTS AND CIRCUMSTANCES OF THE CAS E. 10. THE LEARNED ASSESSING OFFICER IS NOT JUSTIFIED IN LAW IN CHARGING THE INTEREST UNDER SECTION 234B OF THE ACT AND FURT HER THE CALCULATION OF INTEREST UNDER SECTION 234B OF THE ACT IS NOT IN ACCORDANCE WITH LAW SINCE THE RATE, METHOD OF CALCULATION, QUANTUM IS N OT DISCERNABLE FROM THE ORDER OF ASSESSMENT ON THE FACTS AND CIRCUMSTAN CE OF THE CASE. 11. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, SUBST ITUTE AND DELETE ANY OR ALL OF THE GROUNDS OF APPEAL URGED ABOVE. 12. FOR THE ABOVE AND OTHER GROUNDS TO BE URGED DUR ING THE HEARING OF TH4 APPEAL THE APPELLANT PRAYS THAT THE APPEAL BE A LLOWED IN THE INTEREST OF EQUITY AND JUSTICE. 3. IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT ALTH OUGH 12 GROUNDS ARE RAISED BY THE ASSESSEE BUT THE ONLY DISPUTE IS REGARDING ADDI TION MADE BY THE AO OF RS. 17,90,350/- U/S. 68. HE SUBMITTED THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF WEAVING OF SAREES ON BEHALF OF THE CLIE NTS AND THE ASSESSEE ITA NO.1996/BANG/2018 PAGE 3 OF 4 RECEIVES ADVANCE PAYMENT FROM THE CUSTOMERS TO PURC HASE THE RAW MATERIAL BUT ASSESSEE HAS THE INCOME OF ONLY RS. 2,58,520/- IN RESPECT OF WEAVING CHARGES AND IN THIS REGARD, HE DRAWN MY ATTENTION T O PAGE 35 OF PAPER BOOK WHICH CONTAINS THE INCOME AND EXPENDITURE ACCOUNT F OR THE PRESENT YEAR I.E. YEAR ENDING 31.03.2006. IT WAS POINTED OUT THAT AS PER THE SAME, THE ASSESSEE HAS SHOWN INCOME RECEIVED FROM WEAVING CHARGES OF R S. 2,58,520/- AND OUT OF THAT, THE ASSESSEE HAS SHOWN NET INCOME OF RS. 1,05 ,110/-. HE SUBMITTED THAT THIS AMOUNT OF RS. 17,90,350/- WAS RECEIVED BY THE ASSESSEE FROM THE CUSTOMERS AS ADVANCE AND THEREFORE, NO ADDITION IS CALLED FOR IN THIS REGARD BUT EVEN IF SOME ADDITION IS TO BE MADE THEN THE SAME T O THE EXTENT OF INCOME OUT OF THIS RECEIPT AND IT CAN BE MAXIMUM 10% OF SUCH R ECEIPT ALTHOUGH AS PER THE SECTION 44AD OF IT ACT, IT IS PROVIDED THAT ONLY 8% OF TURNOVER CAN BE BROUGHT TO TAX. HE ALSO PLACED RELIANCE ON JUDGEMENT OF HON'B LE KARNATAKA HIGH COURT RENDERED IN THE CASE OF M/S. DELUXE ROADLINES PVT. LTD. VS. DCIT IN ITA NO. 213/2014 DATED 14.10.2014. HE SUBMITTED THAT THE C OPY OF THIS JUDGEMENT IS AVAILABLE ON PAGES 40 TO 47 OF PAPER BOOK. THE LD. DR OF REVENUE SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 4. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. I FIND FORCE IN THE SUBMISSIONS OF LD. AR OF ASSESSEE BECAUSE THE ADDITION WAS MADE BY THE AO ON THIS BASIS THAT AMOUNT OF RS. 17,90,350/- WAS DEPOSITED IN CASH IN ASSESSEES BANK ACCOUNT WITH HDFC BANK, YELAHANKA BRANCH, BANGALORE. THE A O HAS ALSO NOTED THAT THE ASSESSEE IS HAVING INCOME FROM BUSINESS. THIS WAS THE SUBMISSION OF THE ASSESSEE BEFORE CIT(A) THAT THE ASSESSEE IS ENGAGED IN THE PROFESSION OF WEAVING SAREES AND THE AMOUNT OF CASH DEPOSIT IN TH E BANK ACCOUNT WAS OUT OF ADVANCES RECEIVED FROM THE CUSTOMERS. IN MY CONSID ERED OPINION, IN THE FACTS OF THE PRESENT CASE, THIS DEPOSIT OF CASH IN THE BA NK ACCOUNT OF RS. 17,90,350/- SHOULD BE CONSIDERED AS ASSESSEES BUSINESS RECEIPT AND 10% OF THIS SHOULD BE BROUGHT TO TAX AS BUSINESS INCOME. I ORDER ACCO RDINGLY. ITA NO.1996/BANG/2018 PAGE 4 OF 4 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- (ARUN KUMAR GARODIA) ACCOUNTANT MEMBER BANGALORE, DATED, THE 13 TH JULY, 2018. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.