The ITO, Ward-9(2), Surat V. Shri Hareshbhai D.Parvadiya, Surat

ITA 2017/AHD/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6894 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 31-10-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 12-08-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Section: 68

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.2017/AHD/2011 [ASSTT.YEAR : 2007-2008] ITO, WARD-9(2) SURAT. /VS. SHRI HARESHBHAI D. PARVADIYA 39/40, HARI ICHHA IND. STATE A.K. ROAD, SURAT. PAN : AIFPP 7073 D ( (( ( -. -. -. -. / APPELLANT) ( (( ( /0-. /0-. /0-. /0-. / RESPONDENT) + 1 2 ) / REVENUE BY : SHRI V.K. SINGH, SR.DR 4& 1 2 ) / ASSESSEE BY : NONE 5 1 &(* / DATE OF HEARING : 31 ST OCTOBER, 2014 678 1 &(* / DATE OF PRONOUNCEMENT : 7/11/2014 )9 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A). 2. AT THE TIME OF HEARING NONE APPEARED ON BEHALF O F THE ASSESSEE- RESPONDENT, AND ACCORDINGLY, THE APPEAL OF THE REVE NUE IS BEING DECIDED EX PARTE QUA THE ASSESSEE-RESPONDENT ON MERITS AFTER HEARING LE ARNED DR. 3. THE GROUND NO.1 OF THE APPEAL OF THE ASSESSEE IS AS UNDER: ITA NO.2017/AHD/2011 -2- 1. 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 .23,29,924/- MADE BY THE AO BY ESTIMATING TURNOVER OF THE ASSESSEE AT RS.45,00,000/- AS AGAINST RS.26,33,706/- SHOWN IN THE RETURN OF IN COME. 4. THE LEARNED DR SUBMITTED THAT THERE WERE NUMBER OF DEFECTS IN THE ACCOUNT BOOKS MAINTAINED BY THE ASSESSEE, AND THERE FORE, THEY ARE RIGHTLY REJECTED BY THE AO AND THE TURNOVER OF THE ASSESSEE WAS RIGHTLY ESTIMATED AT RS.45 LAKHS AS AGAINST RS.26,33,706/- SHOWN BY T HE ASSESSEE IN ITS ACCOUNT BOOKS AND THE DIFFERENCE OF RS.23,29,924/- WAS TREATED AS INCOME OF THE ASSESSEE. HE SUBMITTED THAT DURING THE SURV EY CASH AS PER CASH BOOK WAS RS.4,36,968/- WHEREAS THE CASH AVAILABLE IN THE PREMISES WAS NIL. THE ASSESSEE COULD NOT EXPLAIN THE REASON FOR THE S AME. THERE WERE CERTAIN VARIATIONS IN THE AMOUNT IN VARIOUS HEADS O F INCOME AS FOUND AT THE TIME OF SURVEY, AND AS DETAILED IN ACCOUNT STATEMEN T FILED BY THE ASSESSEE. HE RELIED ON THE ORDER OF THE AO. 5. WE HAVE CONSIDERED SUBMISSIONS OF THE LEARNED DR AND PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THER E WERE CERTAIN VARIATIONS IN THE AMOUNTS IN VARIOUS HEADS OF EXPEN SES AS FOUND AT THE TIME OF SURVEY AND AS DETAILED IN THE ACCOUNT STATEMENTS FILED BY THE ASSESSEE ALONG WITH ITS RETURN OF INCOME. THE AO HAS RECORD ED THAT DURING SURVEY PROCEEDINGS CASH AS PER CASH BOOK WAS RS.4,36,968/- WHEREAS THE CASH AVAILABLE IN THE PREMISES OF THE ASSESSEE WAS NIL A ND THAT THE ASSESSEE COULD NOT FILE ANY SUBMISSION IN THE REGARD. WE FI ND THAT THE CIT(A) HAS DELETED THE ENTIRE ADDITION OF RS.23,29,924/- WITHO UT GIVING ANY FINDING OR COMMENTS ON THE DISCREPANCIES POINTED BY THE AO IN THE ASSESSMENT ORDER. IN THESE FACTS, WE ARE OF THE VIEW THAT THE ACCOUNT BOOKS OF THE ASSESSEE WERE NOT WHOLLY RELIABLE AND SOME REASONABLE ADDITI ON/DISALLOWANCE COULD BE MADE. HOWEVER, THERE SEEMS TO BE NO JUSTIFICATI ON FOR THE ACTION OF THE ITA NO.2017/AHD/2011 -3- AO IN ESTIMATING THE TURNOVER OF THE ASSESSEE AT A HIGHER FIGURE OF RS.45 LAKHS AS AGAINST THE DECLARED TURNOVER OF RS.26,33, 706/- MAKING THE ADDITION FOR DIFFERENCE AMOUNT AT RS.23,29,924/- AS INCOME OF THE ASSESSEE. NO BASIS WHATSOEVER FOR ESTIMATING HE TURNOVER OF R S.45 LAKHS WAS MENTIONED BY THE AO. IN REPLY TO A SPECIFIC QUESTI ON FROM THE BENCH, THE LEARNED DR COULD NOT GIVE ANY JUSTIFICATION FOR THE ESTIMATION OF TURNOVER OF THE ASSESSESEE AT RS.45 LAKHS. WE FIND THAT THE CIT(A) HAS RECORDED THAT IF THE ADDITION OF RS.23.29 LAKHS IS SUSTAINED , NET PROFIT SHALL WORK OUT TO RS.51.71% AS AGAINST THE ACCEPTED NET PROFIT OF 5.69% IN THE ASSTT.YEAR 2006-07. THE CIT(A) HAS RECORDED THAT THE VALUE OF CLOSING STOCK AS ON THE DATE OF SURVEY AND AT THE END OF THE YEAR WAS A CCEPTED BY THE AO AND NO DISCREPANCY IN STOCK WAS FOUND AT THE TIME OF SU RVEY IN THESE FACTS, WE ARE OF THE VIEW THAT ALTHOUGH SOME ADDITION ON ACCO UNT OF DISCREPANCIES IN THE ACCOUNTS POINTED OUT BY THE AO MAY BE JUSTIFIED , BUT TO ENHANCE THE TURNOVER OF THE ASSESSEE AT ARBITRARY FIGURE OF RS. 45 LAKHS AND MAKING ADDITION OF RS.23.29 LAKHS WAS WHOLLY UNJUSTIFIED. IN THE FACTS OF THE CASE, CONSIDERING THE NET PROFIT RATE OF THE ASSESSEE AND ALSO ACCEPTED NET PROFIT RATE OF THE ASSESSEE BY THE AO IN THE IMMEDIATELY P RECEDING ASSTT.YEAR 2006-207 AT 5.69%, WE ARE OF THE VIEW THAT ENDS OF JUSTICE SHALL BE MET, IF THE ADDITION IS RESTRICTED TO RS. 5 LAKHS ON ACCOUN T OF DISCREPANCIES IN THE ACCOUNT OF THE ASSESSEE, AS AGAINST THE ADDITION OF RS.23.29 LAKHS MADE BY THE AO AND THE GROUND NO.1 OF THE REVENUE IS PARTLY ALLOWED. 6. THE GROUND NO.2 OF THE REVENUE IS AS UNDER: 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS .14,40,025/- MADE BY THE AO U/S.68 OF THE ACT ON ACCOUNT OF UNEXPLAIN ED CASH CREDITS. ITA NO.2017/AHD/2011 -4- 7. THE LEARNED DR SUBMITTED THAT THE ASSESSEE COULD NOT DISCHARGE ITS ONUS REGARDING CREDIT-WORTHINESS OF THE ASSESSEE DE POSITORS, AND THEREFORE, ADDITION WAS RIGHTLY MADE UNDER SECTION 68 OF THE A CT. HE SUBMITTED THAT THE ONUS WAS ON THE ASSESSEE TO PROVE SOURCE OF CRE DIT ENTRIES. HE RELIED ON THE ORDER OF THE AO. 8. WE HAVE CONSIDERED SUBMISSIONS OF THE LEARNED DR AND PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT IN P ARA 6.2 OF THE APPELLATE ORDER PASSED BY THE CIT(A), HE HAS RECORDED THAT TH E ASSESSEE HAS SUBMITTED COMPLETE DETAILS OF CREDIT ENTRIES, SUCH AS, NAMES, ADDRESS, CONFIRMATIONS, COPY OF ACKNOWLEDGEMENT OF I.T. RETU RNS OF THE DEPOSITORS. THE CIT(A) HAS ALSO RECORDED PAN OF THE ALL THE DEP OSITORS IN PARA 6.2 OF HIS APPELLATE ORDER. MAJOR PORTIONS OF THE LOAN AM OUNTING TO RS.12,88,300/- WERE THROUGH ACCOUNT PAYEE CHE QUES FROM SIX PARTIES. THE CIT(A) HAS FURTHER RECORDED THAT ALL 14 DEPOSITORS WERE ASSESSED TO TAX. THE CIT(A) HAS RECORDED THAT IDENTITY OF CREDITORS AND GENUINENESS OF TRANSACTIONS WERE ACCEPTED BY THE AO AND THAT THE A O HAS NOT RAISED ANY DOUBT ABOUT THE CREDIT-WORTHINESS OF THE DEPOSITORS EVEN IN A NOTICE DATED 18.12.2009 ISSUED TO THE ASSESSEE. THE CIT(A) HAS FURTHER RECORDED THAT THE AO DID NOT MAKE ANY INQUIRY DURING ASSESSMENT P ROCEEDINGS AT THE ADDRESSES GIVEN AS ALL WERE EXISTING ASSESSEE. WE FIND THAT INITIAL ONUS PLACED ON THE ASSESSEE OF PROVING THE IDENTITY AND CREDIT-WORTHINESS OF THE DEPOSITORS AND GENUINENESS OF THE TRANSACTIONS HAVE BEEN DISCHARGED BY THE ASSESSEE IN THIS CASE. THE ASSESSEE HAS FILED CONFIRMATION OF THE DEPOSITORS ALONG WITH THEIR NAMES AND ADDRESSES AND ALSO COPY OF THE ACKNOWLEDGEMENT OF IT RETURNS. THE PANS OF 14 CRED ITORS WERE FILED. THE AO COULD HAVE MADE FURTHER INQUIRIES FROM THE A SSESSMENT RECORDS OF THE DEPOSITORS. THE CIT(A) HAS RECORDED THAT THE A O HAS ALSO ALLOWED ITA NO.2017/AHD/2011 -5- INTEREST OF RS.66,400/- PAID TO 14 DEPOSITORS. IN THESE FACTS, WE HOLD THAT THERE IS NO MISTAKE IN THE ORDER OF THE CIT(A) IN H OLDING THAT THE ASSESSEE HAS PROVED IDENTITY OF DEPOSITORS AND GENUINENESS O F THE TRANSACTIONS AND CREDIT-WORTHINESS OF THE DEPOSITORS DURING THE ASSE SSMENT PROCEEDINGS. ACCORDINGLY, THE ORDER OF THE CIT(A) ON THIS ISSUE IS CONFIRMED AND THE GROUND NO.2 OF THE REVENUES APPEAL IS DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED. 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