MUKESH KUMAR JAIN, V. I.T.O, WARD 2(3), BILASPUR(CG)

ITA 209/BIL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0210 (ITAT-RAIPUR)
• Duration Of Justice: 2 year(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 01-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K JAIN
• Assessee Lawyers: R B DOSHI
• Keywords: Business income; Ignorance of law
• Section: 44AD

Judgement Text

ITA NO . 209/ RPR /201 4 ASSESSMEN T Y EAR: 20 11 - 12 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, SMC , RAIPUR [CORAM : PRAMOD KUMAR AM ] ITA NO . 209 / RPR /201 4 AS SESSMENT Y EAR : 20 11 - 12 MUKESH KUMAR J A IN , .APPELLANT C/O. RATAN KUMAR NIRMAL KUMAR JAIN , CHHOTA BAZAR, CHIRMIRI DIST. KOREA (C.G.) [P AN: A DGPJ 1074 L ] VS. INCOME TAX OFFICER , WARD 2 ( 3 ), BILASPUR (C.G.) ...... . RESPONDENT APPEARANCES BY: R .B. DOSHI, FOR THE A PPELLANT D.K. JAIN , F OR THE RE SPONDENT DATE OF CONCLUDING THE HEARIN G : 2 3 .06.2016 DATE OF PRONOUNCING THE ORDER : 22 .09.2016 O R D E R BY WAY OF TH IS APPEAL, THE A SSESS EE APPELLANT HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 2 8 .0 4 .201 4 , PASSED BY THE LEARNED CIT (A), BILASPUR (C.G.), IN THE MATTER OF ASS ESSMENT UNDER SECTION 14 3(3) OF THE INCOME TAX ACT, 1961 FOR ASSESSMENT YEAR 200 5 - 06 , ON THE FOLLOWING GROUND : - 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE , LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN CONFIRMING ADDITION OF RS.6,88,586 / - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ALLEGED NET PROFIT @ 8% ON SALES OF RS.86,07,321/ - . THE ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY CIT(A) IS NOT JUSTIFIED. 2. TO ADJUDICATE ON THIS APPEAL ONLY A FEW MATERIAL FACTS NEED TO BE TAKEN NOTE OF. D URING T HE COURSE OF ASSESSMENT PROCEEDINGS THE A SSESSING OFFICER NOTED THAT WHILE THE ASSESSEE HAS PRODUCED BANK STATEMENT , P ROFIT & L OSS ACCOUNT AND L EDGER ITA NO . 209/ RPR /201 4 ASSESSMEN T Y EAR: 20 11 - 12 PAGE 2 OF 4 ETC. ON THE TOTAL SALES/TURNOVER OF RS.78,29,905/ - , T HE ASSESSEE HAS NOT AUDITE D HIS BOOKS OF ACCOUNT UNDER SECTION 44AB , HENCE THE BOOK RESULT IS NOT RELIABLE AND NOT ACCEPTABLE. ASSESSING OFFICER WAS OF THE VIEW THAT AS THE BOOKS OF ACCOUNT HAVE NOT BEEN AUDITED, THE BOOKS OF ACCOUNTS WERE NOT MAINTAINED BY THE ASSESSEE. IT WAS I N THIS BACK DROP THE A SSESSING OFFICER PROCEEDED TO ESTIMATE THE PROFIT @ 8% ON THE BASIS OF TOTAL CASH/CHEQUE DEPOSIT S BY THE ASSESSEE IN HIS BANK ACCOUNT. THESE DEPOSITS AGGREGATE TO RS 86 , 07 , 321 / - AND THE PROFIT SO CALCULATED COMES TO RS.6,88,586/ - . A GGRIEVED, THE ASSESS E E CARRIED THE MATTER IN APPEAL BE FORE THE LEARNED CIT(A) B UT WITHOUT ANY SUCCESS. WHILE DOIN G SO , LEARNED CIT(A) HAS OBSERVED AS FOLLOWS : - DECISION - THE APPELLANT FILED THE RETURN OF INCOME IN ITR - SAHAJ DECLARING INCOME FROM OTHER S OURCES AS PER 'CHAPTER TV F' AT RS. 1,64,036/ - . AS PER THE COMPUTATION OF TOTAL INCOME FILED ALONGWITH THE RETURN, INTEREST RECEIVED FROM M/S. RATAN KUMAR NIRMAL KUMAR JAIN IS RS. 43,836/ - , OTHER INCOME IS RS. 96,200/ - AND OTHER INTEREST INCOME IS RS. 24,0 00/ - , THUS TOTALING TO RS.1,64,036/ - . THE APPELLANT HAS DISCLOSED INCOME IN THE RETURNS OF THE EARLIER YEARS UNDER THE HEAD 'INCOME FROM OTHER SOURCES'. THIS YEAR, AS EVIDENT FROM THE ABOVE, THE APPELLANT HAS ONLY INCOME FROM OTHER SOURCES AND NOT ANY INCO ME FROM OTHER HEADS. THE CASE WAS PICKED UP FOR SCRUTINY THROUGH CASS BASICALLY FOR THE PURPOSE OF VERIFICATION OF SOURCE OF HUGE CASH DEPOSITS IN THE APPELLANT'S BANK ACCOUNT BEARING NO. 10958003145 WITH SBI, CHIRIRMIRI. THE TOTAL DEPOSITS MADE IN THE ABO VE BANK ACCOUNT DURING THE YEAR UNDER CONSIDERATION IS RS. 86,07,321/ - . THE APPELLANT PRODUCED THE PROFIT AND LOSS A/C, BALANCE SHEET AND OTHER DETAILS IN COURSE OF ASSESSMENT PROCEEDINGS IN HIS EFFORTS TO CREATE EVIDENCE FAVORABLE TO HIM TO JUSTIFY THAT W HATEVER DEPOSITS AND WITHDRAWALS MADE IN THE ACCOUNT WERE THE TURNOVER AND RELATED EXPENSES OF HIS BUSINESS IN RETAIL TRADING OF CONSUMER GOODS WITH THE PLEA THAT THE INCOME FROM THE BUSINESS WAS INADVERTENTLY INCLUDED WITH INCOME FROM OTHER SOURCE DUE TO IGNORANCE OF LAW AND THAT THE BOOKS OF ACCOUNT WERE NOT AUDITED SINCE IT WAS THE FIRST YEAR OF THE BUSINESS ACTIVITIES IN RETAIL TRADING. SUCH IGNORANCE OF LAW IS NOT AN EXCUSE FOR NON - COMPLIANCE WITH LAW OF DISCLOSING THE BUSINESS INCOME SEPARATELY UNDER SEPARATE HEAD AND TO GET THE BOOKS OF ACCOUNTS AUDITED. [RELIED ON C I T VS. LLOYED INSTITUTION (I) (P) LTD. REPORTED IN 164 CTR 196 (SC)] . THE RETURN WAS FILED IN THE FORM WHERE THERE WAS NO LIABILITY OF THE APPELLANT TO MAINTAIN BOOKS OF ACCOUNT OR TO FURN ISH DETAILS OF ASSETS AND LIABILITIES WITH THE DEPARTMENT. IT WAS ONLY WHEN THE APPELLANT'S CASE WAS SELECTED FOR SCRUTINY, HE CAME UP WITH THE DETAILS OF PURCHASES AND SALES RELATING TO HIS RETAIL TRADING IN CONSUMER GOODS SO THAT SOURCE OF DEPOSITS AND P URPOSE OF WITHDRAWALS IN THE ALLEGED BANK ACCOUNT ITA NO . 209/ RPR /201 4 ASSESSMEN T Y EAR: 20 11 - 12 PAGE 3 OF 4 COULD POSSIBLY BE FURNISHED. THE AO IGNORED THE DETAILS FURNISHED IN COURSE OF ASSESSMENT PROCEEDINGS AS AFTER THOUGHTS SIMPLY BECAUSE OF THE FACT THAT SUCH INFORMATION ARE NOT AVAILABLE IN THE RETURN FILED WITH HIM. IT IS TRUE THAT THE APPELLANT COULD ESTABLISH THE PURCHASES MADE FROM SINGLE SUPPLIER M/S. FASHION SUITING PRIVATE LIMITED BY PRODUCING BILLS, BUT THE FACT REMAINS THE SAME THAT THE TRANSACTIONS IN THE BANK ACCOUNT AND THE PROFITS FROM RETAIL TR ADING IN CONSUMER GOODS IS UNDISCLOSED. IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, I FIND THAT THE AO IS REASONABLE ENOUGH IN TREATING THE DEPOSITS IN THE BANK ACCOUNT AS TURNOVER FROM HIS UNDISCLOSED RETAIL TRADING BUSINESS, APPLIED PRESUMPTIVE RAT E ONLY AS PROVIDED IN THE AMENDED PROVISIONS OF SE CTION 44AD OF THE ACT AND ADDED RS.6,88,5867 - TO THE RETURNED INCOME AND HENCE, NO FURTHER INTERFERENCE IN THE ORDER OF THE ASSESSING OFFICER IS WARRANTED. ACCORDINGLY, THE GROUND OF APPEAL IS REJECTED. 3. ASSESSING OFFICER IS NOT SATISFIED AND IS IN APPEAL B E FORE ME . 4. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. I FIND THAT THE ONLY REASON OF THE A SSESSING OFFICER DECIDING TO IGNORE THE BOOK RESULT IS THAT THE S E BOOKS OF ACCOUNTS WERE NOT AUDITED. CONSEQUENCE OF BOOKS OF ACCOUNT NOT BEING AUDITED DESPITE THE REQUIREMENT FOR GETTING THE BOOKS AUDITED UNDER SECTION 44AB IS SET OUT SEPARATELY. O NCE THE BOOKS OF ACCOUNT HAS BEEN PRODUCED BY THE ASSESSEE AND THE RELEVANT DETAILS ARE DULY SUBMITTED BY HIM IN WHICH NO DISCREPANCIES HAVE BEEN POINTED OUT BY THE A SSESSING OFFICER , IT CANNOT BE OPEN TO THE A SSESSING OFFICER TO DISREGARD THE BOOK RESULTS. I N THIS VIEW OF THE MATTER , IN MY CONSIDERED VIEW , THERE WAS NO OCCASION FOR THE A SSESSING OFFICER TO DISTURB THE N ET PROFIT FROM THE BUSINESS DISCLOSED BY THE ASSESSEE. THE ADDITION MADE BY THE A SSESSING OFFICER IS DEVOID OF ANY LEGALLY SUSTAINABLE MERIT. THEREFORE , I DELETE THE SAME. 5. IN THE RESULT, APP EAL IS ALLOWED . PRONOUNCED UNDER RULE 34(4) OF THE APPELLATE TRIBUNAL RULES 1963 TODAY ON 22 ND DAY OF SEPTEMBER, 2016 . SD/ - PRAMOD KUMAR (ACCOUNTANT MEMBER) D ATED: THE 22 ND DAY OF SEPTEMBER , 2016 . ITA NO . 209/ RPR /201 4 ASSESSMEN T Y EAR: 20 11 - 12 PAGE 4 OF 4 PBN/* COPIES TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR