ITO, Bulandshahr V. Sri Suresh Chand Mittal, Bulandshahr

ITA 2034/DEL/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58871 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 27-02-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 03-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHWANI TANEJA
• Assessee Lawyers: S MOHANTY

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G NEW DELHI) BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.2034 /DEL/2010 ASSESSMENT YEAR : 2006-07 ITO, SHRI SURESH CHAND MITTAL, WARD-6, S/O SHRI PRAKASH CHAND MITTAL, BULLANDSHAHR. V. PORP. M/S SELECTION HOUSE, BULANDSHAHR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHWANI TANEJA, ADVOCATE. RESPONDENT BY : SHRI MS. S. MOHANTY, SR. DR. ORDER PER KAPOOR, AM: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORD ER OF LD CIT(A), MEERUT DATED 2.2.2010 FOR ASSESSMENT YEAR 2006/07. THE REVENUE HAS TAKEN FOLLOWING GROUNDS OF APPEALS:- 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT( A) HAS ERRED IN LAW ON THE FACTS AND IN DELETING THE ADDITI ON OF `.5,26,087/- MADE ON ACCOUNT OF UNEXPLAINED DIFFERE NCE OF OPENING AND CLOSING BALANCE AS ON IST APRIL, 2005 AND 31 ST MARCH, 2005. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT( A) HAS ERRED IN DELETING THE ADDITION OF `.6,72,062/- ON A CCOUNT OF DIFFERENT IN THE BALANCE SHEET FILED FOR AT 2006-07. ITA NO2034/DEL/2010 2 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT( A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION O F `.4,69,440/- MADE ON ACCOUNT OF NET PROFIT AFTER MAKING PROPER E NQUIRIES. 4. IN THE FACTS & CIRCUMSTANCES OF THE CASE, THE LD CIT(A )S ORDER MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE REST ORED. 2. THE FIRST GROUND RELATES TO ADDITION OF `.5,26,080 /- MADE ON ACCOUNT OF UNEXPLAINED DIFFERENCE OF OPENING AND CL OSING BALANCE IN THE TWO BALANCE SHEETS FILED BY THE ASSESSEE PERTAINING TO SAME DATE I.E. 31.3.2006, ONE WAS FILED WITH THE RETURN OF INC OME AND THE OTHER WAS FILED DURING THE ASSESSMENT PROCEEDINGS. THE DIFFEREN CE IS DUE TO DELETION OF VALUE OF HOUSE TO THE EXTENT OF `.5,26,2 80/-IN THE BALANCE SHEET FILED DURING THE ASST PROCEEDINGS AND THE CORRESP ONDING AMOUNT WAS REDUCED IN THE CAPITAL ACCOUNT. THE BALANCE SHEET FILED WITH THE RETURN OF INCOME SHOWED THE OPENING BALANCE OF `.17, 36,360/- WHEREAS THE BALANCE FILED DURING ASSESSMENT PROCEEDINGS SH OWS THE OPENING BALANCE IN THE CAPITAL ACCOUNT OF THE PROPR IETOR AS ON 1.4.2005 AT `.12,10,359.99/-. DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE TRIED TO EXPLAIN THE DIFFERENCE THROUGH LETTER 26.1 1.2008 WHEREIN HE STATED THAT THE AFORESAID DIFFERENCE OF `.5,26,000/- WAS ON ACCOUNT OF RESIDENTIAL HOUSE RECEIVED BY HIM AFTER THE DEATH OF HIS WIFE SMT. SANTOSH KUMARI. HE HAD ENCLOSED HER STATEMENT OF AFFAI RS, COPY OF RETURN FOR ASSESSMENT YEAR 1998-99 AND ORDER U/S 143(1)( A) OF THE ACT FOR ASSESSMENT YEAR 1998-99. THE ASSESSING OFFICER DID NOT AGREE TO THE CLARIFICATION MADE BY THE ASSESSEE AND ADDED THE AM OUNT OF `.5,26,000/- ON THE FACT THAT HE HAD EXPLAINED ONLY AFTER IT WAS EXAMINED DURING THE HEARING. 3. THE LD CIT(A) HAS DELETED THE ADDITION OF `.5,26, 000/- ON THE BASIS THAT HOUSE ACTUALLY BELONGS TO SMT. SANTOSH KUMARI , WIFE OF THE ITA NO2034/DEL/2010 3 APPELLANT AND HAD BECOME THE PROPERTY OF ASSESSEE ONLY AFTER HER DEATH. THE ASSESSEE ALSO FILED RECEIPT OF PAYMENT OF HOU SE TAX AND ALSO HER RETURN OF INCOME ALONG WITH THE STATEMENT OF AFF AIRS WHEREIN THE VALUE OF THE HOUSE SHOWN WAS `.5,26,000/-. 4. THE LD AR FOR THE ASSESSEE DURING THE PROCEEDINGS BEF ORE US SUBMITTED THAT THE ASSESSEE WAS NOT REQUIRED TO MAINTAIN BOOKS OF ACCOUNTS AS HIS TURNOVER WAS BELOW `.40 LAKHS AND HE HAD OPTED TO FILE THE RETURN U/S 44AF OF THE ACT. AS SUCH IN THE ABSENCE OF BOOKS, HE WAS NOT REQUIRED TO PREPARE BALANCE SHEET & P&L A/C. REG ARDING TWO BALANCE SHEETS, HE SUBMITTED THAT THESE WERE ONLY PROVI SIONAL AND SHOWED THE STATEMENT OF AFFAIRS AND HAD IN FACT HAD NO IMPACT ON THE INCOME OF THE ASSESSEE. THE LD AR ALSO STATED THAT SALES O F THE ASSESSEE WERE SUPPORTED WITH THE RETURN OF SALES TAX FILE D WITH THE TRADE TAX AUTHORITY. THE ONLY THING THE ASSESSEE WAS REQ UIRED TO DO WAS TO DECLARE HIS INCOME AT MINIMUM RATE OF 5% OF TH E TURNOVER WHICH HE HAD DONE DECLARING PROFIT AT MORE THAN 5%. AFTER HEARING BOTH PARTIES AND CONSIDERING THE INFORMATION ON RECOR D AND THE PROVISIONS OF SECTION 44AF, WE ARE OF THE CONSIDERED OP INION THAT CIT(A) WAS RIGHT IN DELETING THE ADDITION AND IN VIEW THE A PPEAL IS DISMISSED ON THIS GROUND. 5. THE SECOND GROUND RELATES TO ADDITION OF `.6,72,06 2/- TOWARDS THE DIFFERENCE IN VALUATION OF CLOSING STOCK IN TWO BALAN CE SHEETS. THE ADDITION WAS MADE BECAUSE OF DIFFERENCE OF STOCK SHOWN IN THE TWO DIFFERENT BALANCE SHEETS OF THE SAME DATE. WHEN CONFR ONTED BY THE ASSESSING OFFICER, THE ASSESSEE EXPLAINED THAT HE IS AVAILIN G CASH CREDIT LIMIT AGAINST HYPOTHECATION OF STOCK FROM BAN K OF INDIA, BULANDSHAHR IN A/C NO.300079 OF WHICH CREDIT BALANCE AS ON 31,3,2006 IS APPEARING AT `.5,98,764.74. THE CLOSING STOCK AS ON 31.3.2006 ITA NO2034/DEL/2010 4 SHOWN IN THE ASSET SIDE OF THE BALANCE FILED (FILED WIT H THE RETURN OF INCOME) IS AFTER REDUCING THE CREDIT FACILITY AVAILE D FROM BANK WHEREAS THE CLOSING STOCK IN THE BALANCE FILED DURING ASSESSMENT PROCEEDING WAS PREPARED ON THE GROSS BASIS WHEREIN THE STOCK WAS ALSO SHOWN ON THE DEBIT SIDE AND LIMIT OF BANK WAS ALSO SHOWN ON THE CREDIT SIDE. HOWEVER, THE ASSESSING OFFICER DID NOT AGREE TO THE SUB MISSION OF THE ASSESSEE AND ADDED THE DIFFERENCE AS HIS INCOME. 6. BEFORE THE LD CIT(A), THE ASSESSEE ARGUED THAT HE WA S NOT UNDER ANY OBLIGATION TO MAINTAIN BOOKS OF ACCOUNTS SINCE HE HAS FILED THE RETURN OF INCOME U/S 44AF OF THE ACT. 7. LD CIT(A) ACCEPTED THE CONTENTION OF THE ASSESSEE AN D HE HAS DELETED THE ADDITION MADE BY THE ASSESSING OFFICE. HENC E, AGAINST THIS DELETION THE PRESENT APPEAL. 8. WE HAVE HEARD THE PARTIES AND PERUSED THE AVAILABL E RECORD. THE ASSESSEE HAS FILED RETURN OF INCOME U/S 44AF OF THE ACT A ND AS PER SECTION 44AF IS NOT REQUIRED TO MAINTAIN BOOKS OF ACCO UNT AND HE HAS TO DECLARED INCOME @ 5% OR MORE OF SALES. ALL DETAIL S OF PURCHASES AND SALES WERE SUBMITTED DURING ASSESSMENT PROCEEDINGS AND ASSESSEE WAS NOT REQUIRED TO SUBMIT FURTHER DOCUMENTS. IN VIEW OF THE ABOVE, WE ARE OF THE VIEW THAT CIT(A) WAS RIGHT ION DELETIN G THE ADDITION OF `.6,72,,062/-. 9. THE THIRD GROUND RELATES TO ADDITION OF `.4,69,44 0/- BY ESTIMATING NET PROFIT @ 10% OF ESTIMATED SALES OF `.60 LAKHS. THE ASSESSING OFFICER MADE THE ADDITION ON THE FOLLOWING GROUNDS:- ITA NO2034/DEL/2010 5 1. THE ASSESSEE IS RUNNING A HUGE SHOP IN THE MAIN MARKET O F BULANDSHAHR. 2. THE SALES AND PURCHASE SHOWN ARE HIGHLY SUPPRESSED. 3. THE DETAILS SALE OF THE SALES/CASH MEMO NOT PRODUCED. 4. A SPOT INQUIRY WAS CONDUCTED THROUGH THE INSPECTOR ON 2.1.2008 WHO HAD REPORTED THAT AVERAGE SALES PER DAY OF THE AP PELLANT IS `.20,000/-. 5. NO PROPER BOOKS OF ACCOUNT I.E. CASH BOOK LEDGER IS STA TED TO BE MAINTAINED. 6. NO STOCK REGISTER IS STATED TO BE MAINTAINED. AGAINST THE ABOVE ADDITION, THE ASSESSEE REPLIED THAT SA LES, PURCHASE, CLOSING AND OPENING STOCK WERE VERIFIED BY THE TRADE TAX AUTHORITY. HOWEVER, THE ASSESSING OFFICER DID NOT AGREE WITH THE R EPLY FILED BY THE ASSESSEE AND MADE ADDITION OF `.4,69,440/- BEING THE D IFFERENCE BETWEEN AMOUNT OF `. 6LAKHS AND THE INCOME SHOWN BY T HE ASSESSEE. 10. BEFORE THE LD CIT(A), THE ASSESSEES COUNSEL STATED TH AT HE HAD REQUESTED FOR CROSS EXAMINATION OF INSPECTOR AND OPPO RTUNITY WAS NOT PROVIDED TO HIM. HE STATED THAT INSPECTORS REPORT CAN NOT BE RELIED UPON SPECIFICALLY IN VIEW OF THE FACT THAT HE WAS NOT CROSS EXAMINED BY THE COUNSEL OF THE ASSESSEE. IN SUPPORT OF HIS ARGUMENTS, H E RELIED UPON THE FOLLOWING CASE LAWS WHICH CONCLUDES THAT EVI DENCE COLLECTED BEHIND THE BACK OF ASSESSEE HAS NO RELEVANCE AND FURTHER INSPECTORS REPORT HAS NO RELEVANCE UNLESS IT IS CONFRONTED BY ASSESSEE . 1. RAVI PRAKASH AGARWAL HGUF V. ACIT (2000) 67 TTJ (DEL ) 234. 2. MOLA BUX V. ITO (1995) 51 TTJ (P). 1. IN VIEW OF THE ABOVE, THE LD CIT(A) DELETED THE ADD ITION. ITA NO2034/DEL/2010 6 11. WE HAVE HEARD THE PARTIES AND PERUSED THE AVAILAB LE RECORD. WE AGREE WITH THE VIEW TAKEN BY THE LD CIT(A) THAT ASSESSI NG OFFICER CANNOT ESTIMATE THE TURNOVER OF THE ASSESSEE WITHOUT BRI NGING ANYTHING MATERIAL ON RECORD SPECIFICALLY IN VIEW OF THE FACT THAT ASSESSEE WAS NOT GIVEN OPPORTUNITY TO CROSS EXAMINE THE IN SPECTOR AND THE INSPECTORS REPORT WAS OBTAINED BEHIND THE BAC K OF ASSESSEE. IN VIEW OF THE ABOVE, WE UPHELD THE DECISION OF CI T(A) IN DELETING THE ADDITION OF `.4,69,440/-. 12. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMISSED. 13. ORDER PRONOUNCED IN THE OPEN COURT ON THE 16TH DAY OF MARCH , 2012. SD/- SD/- (I.P. BANSAL) (T.S. KAP OOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 16.3.2012. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). ITA NO2034/DEL/2010 7