Vitthal Sadashiv Salunke, Ahmednagar V. Income-tax Officer,

ITA 2062/PUN/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2853 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 11-01-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 17-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DHEERAJ KUMAR JAIN
• Assessee Lawyers: V M MALPANI
• Section: 143(3)

Judgement Text

] ]] ] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , !, # $ BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM ITA NO.2062/PN/2014 ASSESSMENT YEAR : 2008-09 VITTHAL SADASHIV SALUNKE, BHANAS HIVRE, TAL. NEVASA, DIST. AHMEDNAGAR 414 609. PAN : AFKPS4521F . APPELLANT VS. THE INCOME TAX OFFICER, WARD 2, AHMEDNAGAR. . RESPONDENT / APPELLANT BY : SHRI V. M. MALPANI / RESPONDENT BY : SHRI DHEERAJ KUMAR JAIN / DATE OF HEARING : 11.01.2016 / DATE OF PRONOUNCEMENT: 20.01.2016 % / ORDER PER PRADIP KUMAR KEDIA, AM : THE PRESENT APPEAL PREFERRED BY THE ASSESSEE IS AGA INST THE ORDER OF CIT(A)-IT/TP, PUNE DATED 12.09.2014 RELATING TO ASS ESSMENT YEAR 2008-09 PASSED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL :- 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN LAW AND ON FACTS IN ENHANCING THE INCOME AS ASSESSED BY A.O. W ITHOUT APPRECIATING THE FACTS OF THE CASE. 2. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW IN DISREGARDING FACTS PRODUCED ON THE ISSUE INVOLVED I N THIS CASE. 3. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW AS WELL AS ON FACTS IN CONFIRMING THE ADDITIONS MADE BY A.O . WITHOUT APPRECIATING THE FACTS OF THE CASE. 2 ITA NO.2062/PN/2014 4. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) HAS FAILED TO APPRECIATE THE SUBMISSIONS MADE BEFORE HIM IN THE CORRECT PERS PECTIVE AND AS SUCH THE ORDER PASSED BY HIM IS ARBITRARY AND UNJUSTIFIED. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, MODIFY, REVISE, SUBSTITUTE, DELETE, WITHDRAW ANY OR ALL GROUNDS OF APPEAL, IF D EEMED NECESSARY AT THE TIME OF HEARING OF THE APPEAL. 3. BRIEFLY STATED, THE ASSESSEE IS AN INDIVIDUAL DE RIVING INCOME FROM RETAIL TRADE IN ANIMAL FOOD AND IS ALSO ENGAGED IN TRUCK P LYING BUSINESS HAVING TWO TRUCKS. THE RETURN OF INCOME FOR THE ASSESSMENT YE AR 2008-09 WAS FILED ON 01.03.2009 DECLARING TOTAL INCOME OF RS.1,05,190/-. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS TO EXAMINE CERTAIN CASH DEPOSIT S OF RS.19,49,000/- IN THE SAVINGS ACCOUNT. THE ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER THAT HE IS ENGAGED IN THE BUSINESS OF SALE & PURCHASE OF AN IMAL FOOD AND TRANSPORT BUSINESS. THE PURCHASES OF ANIMAL FOOD ARE MADE IN LOCAL MARKET AND FROM THE TRADERS IN JALANA. FOR THE BUSINESS OF ANIMAL FOOD , THE ASSESSEE IS NOT HAVING ANY SHOP OR GODOWN. THE SALES ARE MADE IN THE OPEN MARKET. THE ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER THAT HE HAS KEPT THE SALE REGISTER; PURCHASE REGISTER; AND CASH BOOK, WHICH WAS ADMITTE DLY PRODUCED BEFORE THE ASSESSING OFFICER. HOWEVER, THE REGULAR BOOKS OF A CCOUNT WERE STATED TO HAVE NOT BEEN MAINTAINED. THE ASSESSEE SUBMITTED THAT T HE SOURCE OF THE CASH DEPOSITS IN THE SAVINGS ACCOUNT ARE CASH GENERATED FROM SALE OF ANIMAL FOOD AND TRUCK RECEIPTS. IT WAS OBSERVED BY THE ASSESSI NG OFFICER THAT THE INCOME FROM ANIMAL FOOD WAS NOT DISCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME. THE ASSESSING OFFICER REJECTED THE BOOK RESULTS AS NOT ACCEPTABLE AND HELD THAT NOT PROFIT SHOWN BY THE ASSESSEE IS VERY LOW. HE A CCORDINGLY ESTIMATED THE NET PROFIT @ 20% OF SALES OF RS.17,34,778/- FROM ANIMAL FOOD BUSINESS WHICH WAS WORKED OUT TO RS.3,46,960/-. IN ADDITION, THE INCO ME FROM TRUCK PLYING BUSINESS WAS ESTIMATED AT RS.3,500/- PER MONTH FOR PER TRUCK BY APPLYING SECTION 44AE OF THE ACT, WHICH WAS WORKED OUT TO RS .84,000/-. 4. IN THE FIRST APPEAL BY THE ASSESSEE, THE CIT(A) WHILE AGREEING WITH THE PLEA OF THE ASSESSEE THAT IN THE NORMAL CIRCUMSTANC ES, THE NET PROFIT @ 20% ON TURNOVER IN TRADING ON THE HIGHER SIDE, HE HOWEVER DID NOT ACCEDE WITH THE CONTENTIONS PUT-FORTH BY THE ASSESSEE AND ALSO ENHA NCED THE ESTIMATION FROM 20% TO 25% ON THE GROUND THAT THE ASSESSEE DID NOT DISCLOSE THE INCOME EARNED 3 ITA NO.2062/PN/2014 FROM RETAIL TRADE IN ANIMAL FOOD AT THE FIRST INSTA NCE. COUPLED WITH THIS, HE ALLEGED THAT PROFIT & LOSS ACCOUNT WAS NOT FURNISHE D FOR ITS FINANCIAL AFFAIRS. HE ACCORDINGLY ENHANCED THE ESTIMATED INCOME EARNED FROM RETAIL TRADE IN ANIMAL FOOD ESTIMATED BY THE ASSESSING OFFICER AT R S.3,46,960/- TO RS.4,33,694/- IN ADDITION TO INCOME ASSESSED ON ACC OUNT OF TRUCK PLYING BUSINESS UNDER SECTION 44AE OF THE ACT. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE US. 6. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESS EE VEHEMENTLY SUBMITTED THAT THE PURCHASE BOOK; SALE BOOK AND CAS H BOOK WERE DULY PRODUCED BEFORE THE ASSESSING OFFICER AS WELL AS BEFORE THE CIT(A). HE REFERRED TO PAGE NO.5 OF THE PAPER BOOK AND SUBMITTED THAT PROFIT & LOSS ACCOUNT DECLARING NET PROFIT AT 5.77% OF THE RETAIL TRADE I.E. RS.1,6 0,499/- WAS SUBMITTED BEFORE THE ASSESSING OFFICER. THEREFORE, THE OBSERVATION OF THE CIT(A) IN THIS REGARD IS WHOLLY INCORRECT. HE NEXT SUBMITTED THAT IN VIE W OF SECTION 44AF OF THE ACT, THE INCOME OF THE ASSESSEE FROM RETAIL TRADE SHOULD BE ESTIMATED @ 5% AS PER STATUTORY BENCHMARK. THIS IS OWING TO THE FACT THA T THE REGULAR BOOKS OF ACCOUNT ARE NOT MAINTAINED BY THE ASSESSEE AND THE TURNOVER FROM THE SALE BUSINESS DO NOT EXCEED RS.4,00,000/-. HE THEREFORE CONTENDED THAT ESTIMATIONS BY THE LOWER AUTHORITIES ARE ARBITRARY AND WITHOUT ANY JUSTIFICATION. THE ESTIMATIONS ARE ALSO NOT IN ACCORDANCE WITH LEGISLA TIVE APPROVED RATE OF 5% OF THE TURNOVER. 7. THE LD. DEPARTMENTAL REPRESENTATIVE ON BEHALF OF THE REVENUE, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND THE CIT(A) AND SUBMITTED THAT IN THE FACTS AND CIRCUMSTANCES OF TH E CASE, THE PROVISIONS OF SECTION 44AF ARE NOT APPLICABLE AND THE ESTIMATIONS MADE BY THE CIT(A) IS FAIR AND REASONABLE HAVING REGARD TO THE FACTS OF THE CA SE. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS, ORDERS OF THE LOWER AUTHORITIES AND MATERIAL PLACED ON RECORD. WE FIND THAT THE QUANTUM OF SALE 4 ITA NO.2062/PN/2014 TURNOVER AS WELL AS THE PURCHASES MADE HAS NOT BEEN CONTROVERTED BY THE LOWER AUTHORITIES. WE ALSO OBSERVE THAT NO OBJECTIVE BAS IS HAS BEEN PROVIDED BY THE LOWER AUTHORITIES TO JUSTIFY THE ESTIMATION OF 20% BY THE ASSESSING OFFICER AND ENHANCED ESTIMATION OF 25% OF THE TURNOVER BY THE C IT(A). WE FIND THAT THE ESTIMATION MADE IS RANDOM AND IPSE DIXIT OF THE AUTHORITIES CONCERNED. IT IS TRUE THAT RETURN OF INCOME DID NOT INCLUDE INCOME F ROM RETAIL TRADE IN ANIMAL FOOD. HOWEVER, THIS BY ITSELF WILL NOT ENABLE THE REVENUE TO RESORT THE HIGHER ESTIMATION THAN THE STATUTORY BENCHMARK PROVIDED UN DER SECTION 44AF OF THE ACT WITHOUT BRINGING ANY TANGIBLE EVIDENCE ON RECOR D. WE ARE INCLINED TO ACCEPT THE CONTENTION OF ASSESSEE THAT FAIR AND REA SONABLE ESTIMATION @ 5% IS IN SYNC WITH THE STATUTORY BENCHMARK AS PROVIDED IN SECTION 44AF OF THE ACT IS JUST AND APPROPRIATE IN THE CIRCUMSTANCES. WE FIND THAT THE ASSESSEE HAS ALREADY DECLARED NET PROFIT OF RS.1,00,197/- FROM R ETAIL TRADE WHICH IS MARGINALLY HIGHER THAN THE STATUTORY BENCHMARK OF 5 %. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO SUBSTITUTE THE INCOME ESTI MATED BY HIM FROM RETAIL TRADE AT RS.3,46,960/- TO RS.1,00,197/-. ADDITIONA LLY, THE ASSESSEE SHALL ALSO BE LIABLE TO TAX ON THE INCOME FROM TRUCK PLYING BUSIN ESS AT RS.84,000/- ASSESSED AS PER PROVISIONS OF SECTION 44AE OF THE ACT. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED ON THIS 20 TH DAY OF JANUARY, 2016. SD/- SD/- ( SUSHMA CHOWLA ) ( PRADIP KUMAR KEDIA ) / JUDICIAL MEMBER # / ACCOUNTANT MEMBER PUNE ; DATED : 20 TH JANUARY, 2016. % & '() *)' / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-IT/TP, PUNE; 4) THE CIT-IT/TP, PUNE; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. %+ / BY ORDER , ' # //TRUE COPY// $ %& # '( / SR. PRIVATE SECRETARY ) '* , / ITAT, PUNE