Suhel Sakil Ahmed Shaikh, Surat V. The Income Tax Officer, Ward-2(3)(8), Surat

ITA 222/AHD/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 2316 (ITAT-SURAT)
• Duration Of Justice: 2 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 29-01-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B P K
• Assessee Lawyers: KK SHAH
• Keywords: Business income; Question of law
• Section: 147; 148; 44AD

Judgement Text

SHRI SUHEL SAKIL AHMED SHAIKH /I.T.A. NO.222 /AHD/2016/SRT/A.Y.:2009-10 PAGE 1 OF 5 , , IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT . . , . . , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . . ./ I.T.A NO. 222/AHD/2016/SRT / A.Y.:2009-10 SHRI SUHEL SAKIL AHMED SHAIKH, H.NO.12/1550, BRAHMAN POLE, SHAHPORE CHAR RASTA, SURAT. PAN: BAWPS2892B V S . THE INCOME TAX OFFICER, WARD 2(3)(8), SURAT. APPELLANT /RESPONDENT /ASSESSEE BY SHRI K.K.SHAH, CA /REVENUE BY SHRI B.P.K.PANDA, SR.DR / DATE OF HEARING: 11.04.2018 /PRONOUNCEMENT ON 26 .04.2018 /O R D E R PER O. P. MEENA, ACCOUTANT MEMBER: 1. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-I, SURAT [IN SHORT THE CIT(A)] DATED 09.12.2015 PERTAINING TO ASSESSMENT YEAR 2009-10, WHICH IN TURN HAS ARISEN FROM THE ORDER DATED 06.02.2015 PASSED BY THE ITO WARD 2(3)(8) SURAT (IN SHORT THE AO ) UNDER SECTION 143 (3) READ WITH SECTION 147 OF INCOME TAX ACT,1961 ( IN SHORT THE ACT). 2. THE SOLE GROUND RELATES TO CONFIRMING ADDITION OF RS.15,61,915/-MADE ON ACCOUNT OF CASH DEPOSIT IN BANK ACCOUNT. SHRI SUHEL SAKIL AHMED SHAIKH /I.T.A. NO.222 /AHD/2016/SRT/A.Y.:2009-10 PAGE 2 OF 5 3. SUCCINCTLY, FACTS AS CULLED OUT FROM THE ORDERS OF LOWER AUTHORITIES ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SELLING SECOND HAND GARMENTS. ON VERIFICATION OF BANK ACCOUNT WITH BANK OF BARODA, IT WAS NOTICED THAT THROUGHOUT THE YEAR THE CASH DEPOSIT WERE OF SMALL AMOUNTS EXCEPT RS.14,50,000/- DEPOSITED ON 10.10.2008. THE ASSESSEE HAS NOT FILED RETURN OF INCOME (EXCEPT FILED IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT). SINCE, THE ASSESSEE HAS NOT ABLE TO EXPLAIN THE SOURCE OF CASH DEPOSIT IN HIS SAVING BANK ACCOUNT, THEREFORE, CASH DEPOSITS OF RS.15,61,915/- WERE TREATED AS UNEXPLAINED. 4. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE LD.CIT(A). IT WAS CONTENDED THAT MAJOR PURCHASES WERE MADE FROM SUBWAY GARMENTS TO WHOM CHEQUE OF RS.14,50,000/- WAS GIVEN AGAINST THE PURCHASE OF GOODS. HOWEVER, THE AO COULD NOT FIND THE PARTY ON TWO ADDRESS GIVEN BY THE ASSESSEE IN RESPECT OF SAGINI HASUBHAI GOKARBHAI FROM WHOM MAJOR PORTION OF PURCHASES HAVE BEEN CLAIMED TO HAVE MADE. THE LD. A.R. OF THE ASSESSEE ALSO MADE PLEA BEFORE CIT (A) THAT IN ALTERNATE, 12.5% OF PURCHASES BE TREATED AS UNEXPLAINED IN THE LIGHT OF RATIO LAID DOWN BY HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V. BHOLENATH POLY FAB PVT. LTD. [2013] 355 ITR 290 (GUJ). HOWEVER, CIT (A) OBSERVED THAT THE CONTENTION OF THE APPELLANT THAT CASH DEPOSITS REPRESENTS HIS SALE RECEIPTS IS FOUND TO BE HOLLOW ASSERTION WITHOUT ANY SUBSTANCE IN IT. NO LEGAL NOTICE CAN BE TAKEN TO GRATIS DICTUM I.E. MERE ASSERTION UNSUPPORTED BY EVIDENCE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS FAILED TO PRODUCE BOOKS OF ACCOUNTS AND DURING APPELLATE PROCEEDING PRODUCED COMPUTER GENERATED PURCHASE AND SALES LEDGER. IF THE SAME IS CONSIDERED AS SHRI SUHEL SAKIL AHMED SHAIKH /I.T.A. NO.222 /AHD/2016/SRT/A.Y.:2009-10 PAGE 3 OF 5 TRUE EVEN THEN THE ASSESSEE HAS MADE PURCHASES AND SALES THROUGHOUT YEAR OUT OF TOTAL SALES AT RS.18,40,750/- BUT HE HAS DEPOSITED CASH OF RS.14,50,000/- ONLY ON ONE DAY ON 10.10.2008. THEREFORE, CIT(A) OPINIONED THAT WHY SUCH HUGE CASH WAS KEPT AND WHY REGULAR PAYMENTS COULD NOT MADE TO PURCHASER PARTY CLAIMED AS SUBWAY GARMENTS, WHICH WAS NOT FOUND TRACEABLE ON GIVEN ADDRESS. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, THE CIT (A) UPHELD THE ADDITION MADE BY THE AO. 5. BEING, AGGRIEVED THE ASSESSEE FILED THIS APPEAL BEFORE THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS FILED RETURN OF INCOME SHOWING TAXABLE INCOME OF RS.1,47,260/- ON ACCOUNT OF TRADING IN SECOND HAND GARMENTS ON TURNOVER OF RS.18,40,750/- WHICH IS EVIDENT FROM COMPUTATION OF INCOME. THE ASSESSEE HAS NOT MAINTAINED THE BOOKS OF ACCOUNTS AS PER PROVISION OF SECTION 44AD OF THE ACT. THE ASSESSEE HAS GIVEN A CHEQUE OF AGAINST THE PURCHASES MADE FROM SUBWAY GARMENTS. THERE WAS NO DAY TO DAY RECORDS FOR CASH SALES AND THAT IS WHY, RETURN OF INCOME WAS FILED UNDER SECTION 44AD OF THE ACT. IT WAS STRONGLY URGED THAT NO ENQUIRY WAS MADE WITH REFERENCE TO PAYMENTS MADE FROM SAID BANK ACCOUNT OTHERWISE IT WOULD BE ESTABLISHED THAT THERE WAS NO PAYMENT FOR ANY INVESTMENT BUT IT WAS PAYMENTS FOR GOODS ONLY. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT MERELY BECAUSE BILLS WERE NOT PRODUCED, THE ENTIRE DEPOSITS OUGHT NOT TO BE TAXED AS UNDISCLOSED INCOME. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT IN CASE, IF PURCHASES WERE NOT VERIFIABLE DUE TO PARTY LEAVING BUSINESS PREMISES, THE ADDITION MAY BE RESTRICTED TO 12.5% OF SUCH PURCHASES IN THE LIGHT OF RATIO LAID DOWN BY HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V. BHOLANATH POLY SHRI SUHEL SAKIL AHMED SHAIKH /I.T.A. NO.222 /AHD/2016/SRT/A.Y.:2009-10 PAGE 4 OF 5 FAB PVT. LTD. [2013] 355 ITR 290 (GUJ)/ [2013] 40 TAXMANN.COM 494 (GUJARAT) / 220 TAXMAN 82 (GUJ) LAID DOWN THAT WHERE ASSESSEE DID PURCHASE CLOTH AND SELL FINISHED GOODS, BUT PURCHASERS WERE NOT TRACEABLE, PROFIT ELEMENT EMBEDDED IN PURCHASES WOULD BE SUBJECTED TO TAX AND NOT ENTIRE AMOUNT, AND CIT V. SATHYANARAYAN P. RATHI [2013] 351 ITR 150 (GUJ) : 38 TAXMANN.COM 402 (GUJARAT) : 219 TAXMAN 149 (GUJ) WHICH LAID DOWN THAT WHERE THOUGH PURCHASE OF RAW MATERIAL WAS NOT MADE FROM PARTY FROM WHOM ASSESSEE CLAIMED BUT SUCH MATERIAL WAS PURCHASED FROM OPEN MARKET INCURRING CASH PAYMENT, ONLY PROFIT ELEMENT OF SUCH PURCHASES AND NOT ENTIRE PURCHASES WAS TO BE ADDED TO INCOME OF ASSESSEE. 6. CIT V. SATHYANARAYAN P. RATHI [2013] 351 ITR 150 (GUJ) : 38 TAXMANN.COM 402 (GUJARAT) : 219 TAXMAN 149 (GUJ): 5. FROM THE RECORD, WE NOTICED THAT THE COMMISSIONER (APPEALS) AS WELL AS THE TRIBUNAL FOUND THAT THE PURCHASE OF RAW-MATERIAL, IN WHICH THE ASSESSEE WAS TRADING, WERE ONLY MADE, BUT NOT FROM THE DISCLOSED SOURCES. IN OTHER WORDS, THE CASE AGAINST THE ASSESSEE WAS THAT THE PURCHASES WERE MADE IN THE GREY MARKET THROUGH CASH PAYMENT AND SOME ENTRIES WERE OBTAINED FROM CERTAIN SUPPLIERS WHO HAD NOT SOLD SUCH GOODS. 6. THE PRESENT CASE, THUS, BEING ONE OF ONLY PURCHASE BUT NOT FROM DISCLOSED SOURCES, IT WOULD BE ONLY PROFIT ELEMENT EMBODIED IN SUCH PURCHASE WHICH COULD BE ADDED IN THE INCOME OF THE ASSESSEE AND THUS, RIGHTLY SO DONE BY THE COMMISSIONER (APPEALS) AND THE TRIBUNAL. 7. IF THIS BE OUR CONCLUSION, ONLY QUESTION ARISES WHETHER SUCH PROFIT ELEMENT SHOULD BE ESTIMATED AT THE RATE OF 30% OR 12%. WHENEVER SUCH A QUESTION ARISES, SOME REASONABLE ESTIMATION IS ALWAYS PERMISSIBLE. HARDLY ANY QUESTION OF LAW ON SUCH ASPECT WOULD ARISE. MERELY, IT IS POINTED OUT THAT THE ASSESSEE WAS A TRADER AND THAT THE TRIBUNAL RETAINED 12% OF THE PURCHASE TOWARDS ITS POSSIBLE PROFIT, WE DO NOT FIND ANY REASON TO ENTERTAIN THE APPEAL. IN THE RESULT, TAX APPEAL IS DISMISSED. 7. ON THE OTHER HAND, THE LD. DR REFERRED THE FINDINGS OF CIT (A) AND SUBMITTED THAT THE SO CALLED PARTY FROM WHOM MAJOR PURCHASES WERE MADE WAS NOT FOUND TRACEABLE. THE ONUS OF PROVING THAT CASH DEPOSIT ARE FROM REGULAR BUSINESS ACTIVITY IS NOT DISCHARGED AS NO EVIDENCE OF PURCHASE AND SALE HAVE BEEN FILED. THE CLAIM OF THE ASSESSEE THAT SIMILAR PROFIT WAS DISCLOSED IN RETURN SHRI SUHEL SAKIL AHMED SHAIKH /I.T.A. NO.222 /AHD/2016/SRT/A.Y.:2009-10 PAGE 5 OF 5 OF INCOME FILED FOR A.Y. 2008-09 IS NOT COME TO RESCUE TO THE ASSESSEE AS EACH ASSESSMENT YEAR IS DIFFERENT. THEREFORE, CIT(A) WAS RIGHT IN UPHOLDING THE FINDINGS OF THE AO. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE ASSESSEE HAS NOT FILED ANY RETURN OF INCOME IN REGULAR COURSE EVEN IF HE WAS MAINTAINING BOOKS OF ACCOUNTS AS PER PROVISION OF SECTION 44AD OF THE ACT. IT IS UNBELIEVABLE, THAT PURCHASER FROM WHOM MAJOR PURCHASES WERE CLAIMED WOULD WAIT FROM SO LONG TIME EVEN THOUGH THE ASSESSEE WAS MAKING PURCHASE AND SALE UP TO OCTOBER 2008. THEREFORE, THE SOURCE OF CASH DEPOSIT OF RS.14,50,000/- ON SINGLE DAY I.E. 10.10.2008 WAS REMAINED TO BE UNEXPLAINED. HENCE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A). THEREFORE, SAME IS UPHELD. ACCORDINGLY, THE GROUND OF APPEAL IS DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26-04-2018. SD/- SD/- ( . . /C.M. GARG) ( . . / O.P.MEENA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER / SURAT, DATED: 26 TH APRIL , 2018 OPM COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A)/ ITAT (DR)/GUARD FILE OF ITAT. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, SURAT