Virendra Kumar, Bijnor V. ITO , Moradabad

ITA 2032/DEL/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6880 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 08-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Set aside
• Section: 143(3); 133(6)

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH SMC: NEW DELHI ] BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) ITA. NO. 2032/DEL/2019 (ASSESSMENT YEAR: 2015-16) SHRI VIRENDRA KUMAR, S/O. SHRI ASHA RAM, MOH. JATAN, KIRATPUR, DISTT. BIJNOR. PAN: AMQPK9002L VS. INCOME TAX OFFICER, MORADABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ROHIT AGARWAL, C. A.; REVENUE BY: SHRI R. K. GUPTA , SR. D . R . ; DATE OF HEARING : 1 0 /0 8 /2021 DATE OF PRONOUNCEMENT : 1 0 /0 8 /2021 O R D E R PER PRASHANT MAHARISHI, A. M. 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS), MORADABAD, WHEREIN VIDE ORDER DATED 1.01.2019 THE APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT) BY THE INCOME TAX OFFICER, WARD 3 (2), NAJIBABAD, [ THE LD AO ] UNDER SECTION 143(3) OF THE ACT DATED 18.12.2017, WAS DISMISSED. 2. THE ASSESSEE HAS RAISED THE REVISED GROUNDS OF APPEAL WHEREIN ASSESSEE IS AGGRIEVED WITH RESPECT TO THE ADDITION OF RS. 12,84,831/- BEING 8% PROFIT ESTIMATED BY THE LD. ASSESSING OFFICER ON UN-RECONCILED BANK DEPOSIT OF RS. 1,60,60,396/- AND FURTHER ADDITION OF RS. 22,94,671/- ON ACCOUNT OF ADVANCE RECEIVED FROM THE CUSTOMERS. 3. THE FACT SHOWS THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING BAGGASSEE, PADDY HUSK, TYRES, TUBES AND TRANSPORTATION THROUGH OWN PAGE | 2 TRUCK AND OUTSIDE TRANSPORTERS. THE ASSESSEE IS AN INDIVIDUAL, FILED HIS RETURN OF INCOME ON 18.08.2015 SHOWING TOTAL INCOME OF RS.5,61,220/- WHICH WAS ASSESSED UNDER SECTION 143(3) OF THE ACT BY THE LD. ASSESSING OFFICER AT RS. 41,40,722/- UNDER SECTION 143(3) OF THE ACT. 4. ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT (APPEALS) AND THE SAME WAS DISMISSED UPHOLDING THE FINDINGS OF THE LD. ASSESSING OFFICER. THEREFORE, THE ASSESSEE IS IN APPEAL. 5. GROUND NO. 1 IS GENERAL IN NATURE. THEREFORE, IT DOES NOT REQUIRE ANY ADJUDICATION AND HENCE DISMISSED. 6. GROUND NO. 2 IS WITH RESPECT TO THE ADDITION OF RS. 12,84,831/-. THE FACT SHOWS THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTED THAT ASSESSEE HAS SHOWN TOTAL RECEIPT OF RS. 5,04,57,020/- FROM HIS BUSINESS. THE SAME WAS VERIFIED FROM THE BANK ACCOUNT OF THE ASSESSEE AND THE AO FOUND THAT A SUM OF RS. 7,69,16,665/- WAS DEPOSITED IN THAT AND, THEREFORE, THERE WAS A DIFFERENCE OF RS. 2,64,59,645/-. THE LD. ASSESSING OFFICER ALSO CONSIDERED THE OPENING DEBTORS AND CLOSING DEBTORS AND FOUND THAT RS. 1,03,99,249/- IS REALIZED FROM THE DEBTORS AND STILL THERE IS A DIFFERENCE OF RS. 1,60,60,396/-, WHICH WAS CONSIDERED AS UNDISCLOSED BUSINESS RECEIPTS AND PROFIT @ 8% AT RS. 12,84,831/- WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 7. BEFORE THE LD. CIT (APPEALS) THE ASSESSEE SUBMITTED A DETAILED RECONCILIATION AND A FUND-FLOW STATEMENT WHEREIN THE CLAIM OF THE ASSESSEE IS THAT ASSESSEE HAS DEPOSITED CASH IN BANK ACCOUNT OF RS. 29,15,395/- WITHDRAWN FROM OTHER BANK, RECEIVED LOAN FROM HIS ASSOCIATES AND FAMILY MEMBERS AMOUNTING TO RS. 78,53,895/- AND IS AN OWN INTER BANK FUND TRANSFER OF RS. 37,23,985/- AS WELL AS SALES TAX OF RS.12,02,121/-. THEREFORE, ACCORDING THE ASSESSEE, THERE IS NO DIFFERENCE AND ADDITION IS REQUIRED TO BE DELETED. THE LD. CIT (APPEALS) REJECTED THE EXPLANATION OF THE ASSESSEE. HE FURTHER HELD THAT THE ASSESSEE HAS TAKEN LOANS FROM RELATIVES IN CURRENT ACCOUNT DESPITE ASSESSEE HAVING SAVINGS BANK ACCOUNT AND FURTHER THE LOAN FROM THE RELATIVES WERE NOT RELATED TO THE BUSINESS. THEREFORE, HE UPHELD THE ADDITION. 8. THE LD. AR SUBMITTED BEFORE US THE SAME RECONCILIATION, WHICH WAS PLACED BEFORE THE LD. CIT (APPEALS). HE SUBMITTED THAT THE EXPLANATION GIVEN BY THE PAGE | 3 ASSESSEE WAS NOT CONSIDERED BY HIM. HE FURTHER STATED THAT THE LD. ASSESSING OFFICER HAS ALSO NOT REJECTED THE BOOKS OF ACCOUNT WHEREIN THE ABOVE TRANSACTIONS ARE REFLECTED. HE, THEREFORE, SUBMITTED THAT ADDITION MADE BY THE LOWER AUTHORITIES DESERVES TO BE DELETED. 9. THE LD. DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND FIND THAT THE ASSESSEE HAS GIVEN A FUND-FLOW STATEMENT WHEREIN IT HAS BEEN STATED THAT THERE ARE TWO BANK ACCOUNTS OF THE ASSESSEE WHEREIN ASSESSEE HAS DEPOSITED RS. 7,65,51,665/- AND HAS ALSO SHOWN THE TURNOVER IN THE BALANCE SHEET OF RS. 5,04,57,020/-. HE FURTHER SUBMITTED THAT THERE IS A REALIZATION FROM THE DEBTORS AMOUNTING TO RS. 1,03,99,249/-. TILL THAT POINT THERE IS NO DISPUTE BETWEEN THE ASSESSING OFFICER AND THE ASSESSEE. THE LD. ASSESSING OFFICER HAS NOT CONSIDERED THE INTER-BANK TRANSACTION FROM ONE ACCOUNT OF THE ASSESSEE TO ANOTHER ACCOUNT OF THE ASSESSEE WHEREIN A SUM OF RS. 37,23,985/- WERE TRANSFERRED. FURTHER THERE IS ALSO ELEMENT OF VAT OF RS. 12,84,831/- WHICH ALSO CANNOT BE CONSIDERED AS TURNOVER OF THE ASSESSEE. THE ASSESSEE HAS ALSO STATED THAT A SUM OF RS. 29,15,395/- REPRESENTS CASH DEPOSITED IN THESE TWO BANKS BY WITHDRAWAL FROM THE OTHER BANK. THEREFORE, THIS TRANSACTION ALSO NEEDS TO BE REMOVED FOR THE PURPOSE OF RECONCILIATION. THE ASSESSEE FURTHER STATED THAT A SUM OF RS. 78,53,895/- IS RECEIVED AS A LOAN FROM HIS RELATIVES AND ASSOCIATES, WHICH IS DEPOSITED IN THIS BANK ACCOUNT AND, THEREFORE, SAME IS ALSO REQUIRED TO BE REDUCED FROM THE DIFFERENCE. IT IS APPARENT THAT IF ALL THESE ADJUSTMENTS ARE PUT INTO RECONCILIATION, THE DIFFERENCE IS RS. NIL BETWEEN THE TURNOVER OF THE ASSESSEE SHOWN IN PROFIT AND LOSS ACCOUNT AND AMOUNTS DEPOSITED IN THE BANK ACCOUNT. HOWEVER FACT REMAINS THAT ASSESSEE HAS NOT SHOWN WITH EVIDENCE THE AMOUNT OF VAT, INTER-BANK TRANSFER THROUGH CHEQUES AND SAME DEPOSITED IN CASH BY WITHDRAWING FROM ANOTHER BANK. THE ASSESSEE HAS ALSO NOT SHOWN THE CREDITWORTHINESS AND GENUINENESS OF THE PARTIES FROM WHOM THE LOAN OF RS. 78,53,895/- IS SHOWN TO HAVE BEEN RECEIVED AND CREDITED IN THE ABOVE BANK ACCOUNT. BEFORE US, ALSO THE ASSESSEE HAS SUBMITTED ONLY THE BANK ACCOUNT OF THE ASSESSEE TO SHOW THE LOAN AMOUNT RECEIVED AND FUND FLOW STATEMENT. MERELY SHOWING THE BANK ACCOUNT OF THE ASSESSEE DOES NOT PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE AMOUNT PAGE | 4 RECEIVED BY THE ASSESSEE IN THE BANK ACCOUNT. IN VIEW OF THIS, WE SET ASIDE GROUND NO. 2 OF THE APPEAL BACK TO THE FILE OF THE ASSESSING OFFICER WITH DIRECTION TO THE ASSESSEE TO SHOW WITH THE EVIDENCE THE AMOUNT OF ADJUSTMENT REQUESTED BY HIM WITH REGARD TO VAT, INTER-BANK TRANSFERS, CASH DEPOSITS AND WITHDRWAL FROM OTHER BANKS AND LOAN RECEIVED FROM ASSOCIATES. THE ASSESSING OFFICER MAY VERIFY THE SAME AND DECIDE THE ISSUE AFRESH AFTER GIVING ASSESSEE A REASONABLE OPPORTUNITY OF HEARING. THUS, GROUND NO. 2 OF THE APPEAL IS ALLOWED WITH ABOVE DIRECTION. 11. GROUND NO. 3 IS WITH RESPECT TO THE ADDITION OF RS. 22,94,671/- WHERE THE AMOUNT OF ADVANCE FROM CUSTOMER IS TREATED AS UNEXPLAINED MONEY. THE BRIEF FACTS SHOW THAT ASSESSEE HAS SUNDRY CREDITORS OF RS. 61,37,834/-. THE ASSESSING OFFICER SENT LETTER UNDER SECTION 133(6) OF THE ACT TO ALL THE SUNDRY CREDITORS AND HE FOUND THAT M/S. AMBEY BALAJI & COMPANY HAS SUBMITTED THAT THE AUDIT REPORT AND BALANCE SHEETS ARE UNDER PREPARATION AND DID NOT FURNISH EVIDENCE, SUCH AS PAN AND COPY OF INCOME TAX RETURN. SUBSEQUENTLY, ASSESSEE PRODUCED THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT OF THAT PARTY. THE LD. ASSESSING OFFICER FOUND THAT THE DATE OF BALANCE SHEET IS 26.10.2015 WHEREIN THAT PARTY VIDE LETTER DATED 15.11.2017 SUBMITTED THAT ITS BALANCE SHEET AND AUDIT REPORT IS UNDER PREPARATION. FURTHER, NO ITR WAS PRODUCED AND, THEREFORE, ADDITION WAS MADE. THE LD. CIT (APPEALS) CONFIRMED THE SAME. 12. THE LD. AR CONTESTING THE ABOVE ADDITION STATED THAT WHEN THE PARTY HAS CONFIRMED THAT IN ITS BALANCE SHEET THE AMOUNT IS SHOWN AS AN ADVANCE AND IN 133(6) NOTICE THAT PARTY SUBMITTED THE LEDGER ACCOUNT STATING THAT IT HAS DEALING WITH ASSESSEE AS WHOLE-SALE MERCHANT OF PADDY AND PADDY HUSK. AS PER THE LEDGER ACCOUNT OF THAT PARTY, THE AMOUNT OF RS. 22,94,671/- WAS PAID AS AN ADVANCE TO THE ASSESSEE AND THE SAME IS CONFIRMED WITH THE BALANCE OF THE PARTY IN THE BOOKS OF THE ASSESSEE RECEIVED AS AN ADVANCE. HE SUBMITTED THAT THERE IS NO REASON TO MAKE AN ADDITION. HE SUBMITTED THAT MERELY BECAUSE THE BALANCE SHEET WAS NOT SUBMITTED BY THAT PARTY, THIS AMOUNT WAS ADDED. IT WAS STATED THAT IN SUBSEQUENT PERIOD THE ASSESSEE HAS ALREADY BOOKED THE SALES TO THIS PARTY. THEREFORE, THERE IS A DOUBLE ADDITION. 13. THE LD. DR REITERATED THE FINDINGS OF THE LOWER AUTHORITIES. PAGE | 5 14. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND FIND THAT THE ASSESSEE HAS SUBMITTED THE LEDGER ACCOUNT TO THE ASSESSING OFFICER OF M/S. AMBEY BALAJI & COMPANY FROM HIS BOOKS OF ACCOUNTS , CREDITOR HAS ALSO CONFIRMED THE AMOUNT BY SUBMITTING COPY OF ACCOUNT OF THE ASSESSEE FROM THE BOOKS OF THE CREDITOR. MERELY BECAUSE BALANCE SHEET WAS SUBMITTED LATER ON, NO ADDITION SHOULD HAVE BEEN MADE. FURTHERMORE, WHEN THE CLAIM OF THE ASSESSEE IS THAT IN SUBSEQUENT YEAR IT HAS BOOKED SALES AGAINST THE ABOVE ADVANCE, WE SET ASIDE THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER WITH DIRECTION TO THE ASSESSEE TO SHOW THAT IN SUBSEQUENT YEAR ASSESSEE HAS ALREADY BOOKED SALES AGAINST THE ABOVE ADVANCE. THE LD. ASSESSING OFFICER MAY VERIFY THE SAME AND ALSO GIVE DUE CREDIT TO THE CONFIRMATION SUBMITTED BY THE PARTY. ACCORDINGLY GROUND NO. 3 IS ALSO ALLOWED WITH ABOVE DIRECTIONS. 15. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED, FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON : 10/08/2021. SD/- SD/- ( AMIT SHUKLA ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 10/08/2021. *MEHTA* COPY FORWARDED TO 1. APPELLANT; 2. RESPONDENT 3. CIT 4. CIT (APPEALS) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI PAGE | 6 D ATE OF DICTATION 1 0 . 0 8 . 2 0 2 1 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 1 0 . 0 8 . 2 0 2 1 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 1 0 . 0 8 . 2 0 2 1 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/ PS 1 0 . 0 8 . 2 0 2 1 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 1 0 . 0 8 . 2 0 2 1 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS 1 0 . 0 8 . 2 0 2 1 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 1 0 . 0 8 . 2 0 2 1 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 1 0 . 0 8 . 2 0 2 1 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE OR DER