Sanjay Rathi, CHHINDWARA V. Income Tax Officer Ward-1, CHHINDWARA

ITA 212/JAB/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2264 (ITAT-JABALPUR)
• Duration Of Justice: 2 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 16-10-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: G N PUROHIT
• Keywords: Unexplained cash credit; Depreciation
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JABALPUR BENCH, JABALPUR BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA NO. 212/JAB/2015 / ASSESSMENT YEAR : 2010-11 SANJAY RATHI, PROP. OF M/S. RATHI INDUSTRIES, SAUSAR, CHHINDWARA (MP) PAN : ACPPR 7820 Q VS INCOME TAX OFFICER, CHINDWARA-1, CHINDWARA (MP) / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI G.N. PUROHIT, SR. ADV. REVENUE BY : SHRI. P.D. CHOUGULE, DR / DATE OF HEARING : 12/03/2018 / DATE OF PRONOUNCEMENT: 14/03/2018 / O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER:- THIS APPEAL OF ASSESSEE PERTAINING TO ASSESSMENT YEAR 2010-11 IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-I, JABALPUR DAT ED 11.08.2015 VIDE APPEAL NO.J/CIT/A/I/ITO/W.1/CWA/039/13-14, ARISING OUT OF ORDER UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) DATED 11.03.2013 FRAMED BY THE ITO-1, CHHINDWARA. 2. BRIEFLY STATED FACTS, AS CULLED OUT FROM THE RECORD, ARE THAT THE ASSESSEE IS AN INDIVIDUAL RUNNING PROPRIETORSHIP CONCERN NAMELY M/S. RATHI INDUSTRIES, SAUSAR, CHINDWARA. INCOME OF RS. 6,99,340/- WAS DISCLOSED IN THE RETURN OF INCOME FILED ON 01.10.2010. CASE OF ASSESSEE W AS SELECTED FOR SCRUTINY ASSESSMENT AND NECESSARY NOTICES UNDER SECTIO N 142(1)/143(2) OF THE ACT WERE DULY SERVED UPON THE ASSESSEE. THE LEAR NED ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS TAKEN UNSECURED LOAN OF R S.27 LAKHS FROM THREE PARTIES AT RS.9 LAKHS EACH. INVESTIGATIONS WERE CAR RIED OUT TO EXAMINE THE ALLEGED UNSECURED LOANS IN THE LIGHT OF PROVISION S OF SECTION 68 OF THE ACT, BUT THE ASSESSEE FAILED TO CONVINCE THE LEARNED ASSESSING OFFICER. THE ITA NO. 212/JAB/2015 SANJAY RATHI VS. ITO AY : 2010-11 2 ASSESSING OFFICER SUBSEQUENTLY MADE AN ADDITION OF RS. 27,00,000/- UNDER SECTION 68 OF THE ACT ALONGWITH DISALLOWANCE OF SOME EXP ENSES AMOUNTING TO RS.2,03,850/- AND ASSESSEE TOTAL INCOME AT RS.36,03,190/-. APP EAL BEFORE THE LD. CIT(A) BROUGHT PART RELIEF TO THE ASSESSEE. NOW, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL RAISING FOLLOWING GROUNDS OF APPEAL. 1. THAT THE LEARNED CIT(A) AS WELL AS AO HAS ERRED IN L AW AND ON FACTS OF THE CASE IN MAKING ADDITION OF RS.27,00,000/- ON ACCOUNT O F FOLLOWING CASH CREDIT:- (I) KAMAL KISHORE KOTHARI RS.9,00,000/- (II) BHAVESH POPAT - RS.9,00,000/- (III) TULSIRAM BAISATE - RS.9,00,000/- 2. THAT THE LEARNED CIT(A) IS NOT JUSTIFIED IN CONFIR MING THE ADDITION OF RS.50,000/- OUT OF VARIOUS HEADS OF EXPENSES. THE ADDITION SHOULD BE QUASHED IN TOTO. 3. THAT THERE IS NO JUSTIFICATION FOR CONFIRMING DISAL LOWANCE OF 10% OUT OF VEHICLE EXPENSES AND DEPRECIATION. THE DISALLOWANCE OF E XPENSES IS UNWARRANTED AND WITHOUT ANY BASIS. THE SAME MAY PLEASED BE DELETED IN TOTO. 4. THAT THERE IS NO JUSTIFICATION IN CONFIRMING ADDITION OF RS.15,000/- FOR ALLEGED LOW HOUSEHOLD EXPENSES. THE ADDITION SHOULD BE QUASHED IN TOTO. 5. ANY OTHER GROUND THAT MAY ARISE AT THE TIME OF HEARING OF THE APPEAL. 3. APROPOS GROUND NO.1 RELATING TO ALLEGED ADDITION OF RS.27 LAKHS UNDER SECTION 68 OF THE ACT, LEARNED COUNSEL FOR THE AS SESSEE SUBMITTED THAT EVEN THOUGH EVIDENCES WERE FILED TO PROVE THE IDENT ITY, GENUINENESS AND CREDITWORTHINESS OF THE CASH CREDITORS, BUT DURING T HE CROSS-EXAMINATION THE ALLEGED CASH CREDITORS DID NOT ACCEPT TO HAVE PROVIDED LOANS. ON THE OTHER HAND, LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH T HE RECORDS CAREFULLY. THE ISSUE RAISED IN GROUND NO.1 RELATES TO THE ADDITION FOR ITA NO. 212/JAB/2015 SANJAY RATHI VS. ITO AY : 2010-11 3 UNEXPLAINED CASH CREDIT UNDER SECION 68 OF THE ACT FOR RS.27 LAKHS RELATING TO FOLLOWING THREE PARTIES:- (I) KAMAL KISHORE KOTHARI RS.9,00,000/- (II) BHAVESH POPAT - RS.9,00,000/- (III) TULSIRAM BAISATE - RS.9,00,000/- 5. FROM THE PERUSAL OF THE RECORD AS WELL AS DETAILED EX AMINATION BY LEARNED CIT(A), THE FOLLOWING FACTS GOES UNCONTROVERT ED AT THE END OF THE ASSESSEE THAT COMMONLY FOR ALL THE THREE CASH CREDITORS THERE WERE DEPOSITS IN CASH ON THE DAY OF GIVING UNSECURED LOANS AND THE AMO UNT WAS WITHDRAWN IN CASH ON THE DATE OF RETURNING BACK OF THE CHEQUE. IT WAS FURTHER NOTICED THAT THERE WAS NO INTEREST PROVIDED, SOURCE OF INCOME REMAINS UNSUBSTANTIATED AND THE REGULAR INCOME OF EACH CAS H CREDITOR IS TOO MEAGER TO JUSTIFY THE HIGH UNSECURED LOAN GIVEN BY T HEM. ABOVE ALL, WHEN THE OPPORTUNITY OF CROSS-EXAMINATION WAS GIVEN, THE AS SESSEE COMPLETELY FAILED TO PROVE THE CREDITWORTHINESS OF THE ALLEGED C ASH CREDITORS. WE, THEREFORE, IN THE GIVEN FACTS AND CIRCUMSTANCES OF TH E CASE, FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) CONFIRMI NG THE ADDITION OF RS.27 LAKHS. IN THE RESULT, GROUND NO.1 OF THE ASSESSEE IS DISMISSED. 6. APROPOS GROUND NO.2, WHICH RELATES TO DISALLOWANCE OF EXPENSE OF RS.50,000/-, WE OBSERVE THAT THE LEARNED ASSESSING OFFICER MADE LUMP-SUM DISALLOWANCE OF 10% OF SOME OF THE EXPENSES NAMELY WEEKL Y WAGES, GINNING EXPENSES, IRONING EXPENSES RAW-COTTON EXPENSES ETC.. , TOTALING TO RS.4,99,996/-. LEARNED ASSESSING OFFICER MADE DISALLOWANCE O F RS.50,000/- WHICH WAS CONFIRMED BY LD. CIT(A). WE FIND THAT THE AL LEGED DISALLOWANCES ARE MERELY ON ESTIMATE BASIS. WE, THEREFORE, LOOKING T O THE FACT THAT ONLY ESTIMATED DISALLOWANCE HAS BEEN MADE, FIND IT PROPER TO SUSTAIN 5% OF THE DISALLOWANCE, THEREBY GIVING RELIEF OF RS.25,000/- TO THE ASSESSEE. GROUND NO.2 OF THE ASSESSEE IS THUS PARTLY ALLOWED. ITA NO. 212/JAB/2015 SANJAY RATHI VS. ITO AY : 2010-11 4 7. APROPOS GROUND NO.3 RELATING TO THE DISALLOWANCE OF R S.93,000/-, WE OBSERVE THAT LEARNED ASSESSING OFFICER MADE AN ESTIMATED DISALLOWANCE AT THE RATE OF 20% FOR THE PETROL, DIESEL AND MAINTENANCE OF VEHICLE ETC.. AND THE LEARNED CIT(A) REDUCED IT TO 10%. WE OBSERVE THAT IN T HE GIVEN FACTS THE ASSESSEE WAS UNABLE TO PROVIDE THE COMPLETE DETAILS OF THE EXPENDITURE. LEARNED CIT(A) HAS, THEREFORE, RIGHTLY SUSTAINED THE D ISALLOWANCE TO 10% IN PLACE OF 20% MADE BY THE ASSESSING OFFICER. NO INTERF ERENCE IS, THEREFORE, CALLED FOR IN THE FINDINGS OF THE LEARNED CIT(A). GR OUND NO.3 OF THE ASSESSEE IS THUS DISMISSED. 8. APROPOS GROUND NO.4, WHICH IS AGAINST THE CONFIRMATIO N OF ADDITION OF RS.15,000/- FOR ALLEGED LOW HOUSEHOLD EXPENSES. WE FI ND THAT THE ASSESSEE HAS SHOWN HOUSEHOLD EXPENSES OF RS.6000/- PER MO NTH HAVING FAMILY OF THREE PERSONS, THEREBY SHOWING A TOTAL WITHD RAWAL OF RS.72,000/- IN AN YEAR. THE LEARNED ASSESSING OFFICER FURTHER MADE ADDITION OF RS.30,000/- WHICH SCALED DOWN BY THE LD. CIT(A) TO RS.15,000/- . BEFORE US, THE LEARNED COUNSEL FAILED TO PLEAD ON THIS ISSUE AND, THEREFORE, NO INTERFERENCE IS CALLED FOR IN THE FINDINGS OF THE LD . CIT(A) IN THIS REGARD WHICH IS CONFIRMED. GROUND NO. 4 IS ALSO DISMISSED AC CORDINGLY. 9. GROUND NO.5 IS GENERAL IN NATURE WHICH DOES NOT REQU IRE ANY SEPARATE ADJUDICATION. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWE D. ORDER PRONOUNCED IN THE COURT ON 14 TH MARCH, 2018 AT JABALPUR. SD/- SD/- (KUL BHARAT) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER JABALPUR; DATED 14/03/ 2018 *BIT ITA NO. 212/JAB/2015 SANJAY RATHI VS. ITO AY : 2010-11 5 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, JABALPUR 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, JABALPUR