SHRI JAGMOHAN SINGH S/O SHRI TARSEM SINGH, JALANDHAR V. INCOME TAX OFFICER WARD-2, PHAGWARA

ITA 2/ASR/2018

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 2328 (ITAT-AMRITSAR)
• Duration Of Justice: 4 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 31-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Presumptive income
• Section: 271(1)(c); 144; 44AD

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. No. 02/Asr/2018 Assessment Year: 2013-14 Sh. Jagmohan Singh S/o Sh. Tarsem Singh, Moron, Phillaur, Jalandhar [PAN: EULPS 4890F] Vs. Income Tax Officer, Ward-2, Phagwara (Appellant) (Respondent) Appellant by : None Respondent by: Sh. S. M. Surendranath, Sr. DR Date of Hearing: 18.04.2022 Date of Pronouncement: 13.05.2022 ORDER Per Dr. M. L. Meena, AM: This appeal has been filed by the assessee against the impugned order dated 27.09.2017 passed by the Ld. Commissioner of Income Tax (Appeals)-2, Jalandhar, in respect of the Assessment Year 2013-14. 2. The assessee has raised the following grounds of appeal: ITA No.02/Asr/2018 Jagmohan Singh v. ITO 2 “1. That the Ld. CIT(A) has erred in not accepting the argument of the appellant qua typographical mistake when the same apparently inspires confidence from the figures given in the computation chart of income when compared with assessment year 2014-15. 2. That the Ld. CIT (A) has also not taken care of the factual aspect of the case as mentioned in brief synopsis and Ground No. 3 of the memo of appeal. Hence the order is not a judicious are thus liable to be struck down. 3. That observation of Ld. CIT(A) that appellant failed to file revise return on rectification application to rectify the mistake before the Assessing officer does not hold good as by the time knowledge of mistake was gathered exparte assessment stood framed & time to revise application was filed on _____ & the same is still pending for adjudication. Hence appellant when made vigilant about legal course available to him& he acted without delay. Hence the impugned order is barred on conjunctures & surmises thus liable to be struck down. 4. That mistake in computation of income can be taken pari passu the mistake in the order under appeal as in the opening lines it has been mentioned by CIT (A) "The present appeal in this case was filed on 08.04.2016 by the appellant against order dated 03.03.2016 of the Assessing officer passed u/s 271(1)(c) of the Income Tax Act, 1961 (in short 'the Act'), which is in time and in order." Such mistakes cannot change the letter & spirit of document if seen in totality. So if the return for subsequent assessment year 2014-15 is seen it emanates that turnover of Rs. 11.50 lacs is reflected which is proportionately higher than actual figure of Rs. 10 lacs for assessment year 2013-14. On the contrary, if the figure of turnover for current assessment year is taken Rs. 1 crore than there is steep fall in sale turnover. Thus CIT (A) has erred in holding the explanation as an afterthought.” 5. That assessee craves to leave or amend any ground of appeal during the pendency of the present appeal. ITA No.02/Asr/2018 Jagmohan Singh v. ITO 3 3. None attended for the assessee, however, after hearing the ld. DR for the department, we decided the appeal on merits after going through the facts on record. 4. The Assessing Officer has made an addition of Rs.5,17,000/- on account of estimated business income u/s 44AD of the Act and capital investment by way of passing the assessment order ex-parte qua the assessee u/s 144 of the Act. The ld. CIT(A) has confirmed the finding of the AO by observing vide para 4 is as under: “4. However, neither the assessee appeared on the said date nor any written reply was received on his behalf. Thus in view of repeated non- compliance of statutory notices, I am of the considered view that the assessee has nothing to say in this behalf and it is a fit case for ex-parte u/s 144 of the Act. Accordingly, I proceed to frame ex- parte assessment in this case to the best of my judgment on merits. The following additions are therefore made: (a) The assessee had shown income of Rs 2,83,000/- u/s 44AD of the Income Tax Act, 1961. As per section 44AD total Presumptive Income should be at least 8% of total turnover. Since the assessee has shown total turnover to be Rs. 1 Crore, his total presumptive income comes to Rs. 8,00,000/-. As per Section 44AD any deduction allowable under the provisions of section 30 to 38 shall, for the purpose of sub section 1 of section 44AD, be deemed to have been already given full effect to and no further deduction under those sections shall be allowed. Accordingly, his income from the business is assessed at Rs.8,00,000/ .Thus, there is difference of Rs. 5,17,000/-(8,00,000/- -2,83,000). Therefore, Rs. 5,17,000/- is treated as undisclosed Income of the assessee and added in his returned Income. As the assessee has furnished inaccurate particulars of income in respect of the above, penalty proceedings u/s 271(1)(c) have been initiated separately. (b) To run the business for which turnover of Rs. 1 crore has been made, the assessee would have made certain investment. In the show cause ITA No.02/Asr/2018 Jagmohan Singh v. ITO 4 notice u/s 144 this fact was also confronted to the assessee. Accordingly, investment/capital of the assessee for this business is taken @ of 10% of Rs. One crore, i.e., Rs. 10,00,000/-, which is treated as his investment from undisclosed sources and added to his returned income. As the assessee has furnished inaccurate particulars of income in respect of investment from undisclosed sources, penalty proceedings u/s 271(1)(c) have been initiated separately. 5. Before the ld. CIT(A), the appellant assessee has submitted that he is the agriculturist and he had engaged in higher services of travel agent to seek a Visitor Visa for Canada for himself and his family. He has filed two Income Tax Return for assessment years 2013-14 & 2014-15 declaring therein a gross turnover of Rs. 10,00,000/- and 1,11,50,000/- respectively. The appellant has argued before the ld. CIT(A) that in fact there was a typographical mistake and mentioning the figure of turnover at Rs1,11,50,000/- instead of actual turnover of Rs. 11,50,000/- lacs only. The assessee in grounds has contended that if the turn over is taken at Rs. 10,00,000/- and 11,50,000/- for the assessment year 2013-14 and assessment year 2014-15 respectively, the profit rate would be 2.83% and 25.95% respectively in parity to what was correctly declared by the assesse in the immediately preceding year i.e. 2013-14. In our view, either the ld. CIT(A) ought to have taken the correct figure of turn over as claimed by the assessee at Rs. 11,50,0000/- or he was required to establish the figure of turn over of Rs. 1,11,50,000/- by bringing cogent documentary evidence on record. Merely, adopting some figure as turn over which shown in the return of income by typing mistake is not justified. In our view, in the absence of documentary evidence on record to prove the contrary, considering the volume of Correct turn over at Rs. 11,50,000/-, the income ITA No.02/Asr/2018 Jagmohan Singh v. ITO 5 shown by the assessee at Rs. 3,46,000/- u/s 44AD of the I.T. Act which is more than 8% as prescribed u/s 44AD of the Act, is fair and justified. 6. The decision of the ld. CIT(A) based on adopting the business turnover on the basis of presumption and assumption cannot be approved. Considering the peculiar facts of the present case, we hereby accept the business turnover of the assessee at Rs. 11,50,000/- lac for the year under consideration and thereby the net profit of Rs.2,83,000/- which comes out at 28.3% as justified. Accordingly, the order of ld. CIT(A) confirming the addition of Rs.5,17,000/- is set aside and thus, this addition is hereby deleted. 7. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 13.05.2022 Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member Date: 13.05.2022 Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(Appeals) (4) The CIT concerned (5) The Sr. DR, I.T.A.T True Copy By Order