BHARAT SHYAMSUNDER GUPTA, MUMBAI V. ITO WARD- 31(1)(3), MUMBAI

ITA 2239/MUM/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 5572 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 10-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S ABI RAMA KARTHIKEYAN
• Assessee Lawyers: S G GOYAL
• Keywords: Bonafide belief; Reasonable cause; Revised return; TDS
• Section: 44AD; 133(6); 139(5); 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.2238/M/2019 ASSESSMENT YEAR: 2014-15 ITA NO.2239/M/2019 ASSESSMENT YEAR: 2014-15 M/S. BHARAT SHYAMSUNDAR GUPTA, 50, HEERAMANI RATAN CHS LTD., BANGUR NAGAR, GOREGAON (W), MUMBAI 400 104 PAN: AABPG8963D VS. ITO WARD-31(1)(3) C-13/305C, PRATYAKSHAKAR BHAVAN, BKC, BANDRA (E), MUMBAI 400 051 (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI S.G. GOYAL, A.R. REVENUE BY : SHRI S. ABI RAMA KARTHIKEYAN, D.R. DATE OF HEARING : 11.07.2019 DATE OF PRONOUNCEMENT : 20.08.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE ABOVE TITLED TWO APPEALS HAVE BEEN PREFERRED B Y THE ASSESSEE AGAINST THE COMMON ORDER DATED 22.02.2019 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER R EFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEAR 2014-15. ITA NO.2238/M/2019 2. THE ONLY ISSUE CHALLENGED BY THE ASSESSEE IN THE VARIOUS GROUNDS OF APPEAL IS AGAINST THE CONFIRMATION OF AD DITION OF RS.9,00,000/- BY LD. CIT(A) AS MADE BY THE AO BY ES TIMATING ITA NOS.2238 & 2239/M/2019 BHARAT SHYAMSUNDAR GUPTA 2 THE PROFIT @ 10% OF GROSS RECEIPTS OF RS.1,80,00,0 00/- AS AGAINST THE PROFIT SHOWN BY THE ASSESSEE AT 5.32%. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED H IS RETURN OF INCOME ON 28.07.2014 DECLARING AN INCOME OF RS.4,67 ,620/-. THEREAFTER, THE RETURN WAS REVISED ON 28.02.2016 DE CLARING INCOME OF RS.10,52,940/-. DURING THE COURSE OF ASS ESSMENT PROCEEDINGS, THE AO NOTICED THAT IN THE REVISED RET URN THE ASSESSEE HAS DISCLOSED INCOME ON PRESUMPTIVE BASIS UNDER SECTION 44AE OF THE ACT AT RS.9,00,000/- AND ACCORD INGLY ASKED THE ASSESSEE TO SUBMIT THE DETAILS OF VEHICLE LOAN AND HIRE CHARGES, THE INCOME WHEREOF WAS OFFERED TO TAX ON P RESUMPTIVE BASIS UNDER SECTION 44AE. THE ASSESSEE SUBMITTED B EFORE THE AO THAT INCOME WAS OFFERED TO TAX UNDER SECTION 44A E AS THE ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNTS D URING THE YEAR. HOWEVER, THE ASSESSEE FILED COPY OF BANK STA TEMENTS, TDS FORM ETC., LIST OF MOTOR VEHICLES RUN DURING THE YE AR. THE AO ALSO ISSUED NOTICE UNDER SECTION 133(6) OF THE ACT TO VA RIOUS PARTIES WHO HAVE AVAILED SERVICES OF THE ASSESSEE DURING TH E YEAR. THE AO FOUND DURING THE COURSE OF ASSESSMENT PROCEEDING S THAT INCOME AND EXPENDITURE FILED BY THE ASSESSEE SHOW A GROSS RECEIPT OF RS.1,69,30,936/- AGAINST WHICH EXPENSES OF RS.1,60,30,935/- WERE CLAIMED. ACCORDING TO THE AO THE RECEIPT AND EXPENSES OF THE ASSESSEE WERE NOT CORRELATING A ND CORROBORATING WITH THE BANK STATEMENT. THE AO NOTE D THAT THE TURNOVER OF THE ASSESSEE HAS EXCEEDED THE LIMIT OF RS.1,00,00,000/- AND THEREFORE THE CASE OF THE ASSE SSEE IS COVERED BY THE PROVISION OF SECTION 44AE OF THE ACT AND ACCORDINGLY INITIATED PENALTY PROCEEDINGS UNDER SEC TION 271B OF THE ACT. THE AO NOTED THAT THE RETURN OF INCOME WA S FILED UNDER ITA NOS.2238 & 2239/M/2019 BHARAT SHYAMSUNDAR GUPTA 3 SECTION 44AD DESPITE THE FACT THAT TURNOVER WAS EXC EEDING RS.1,00,00,000/-. THEREAFTER THE ASSESSEE FILED TH E REVISED RETURN ONLY WHEN THE CASE WAS SELECTED FOR SCRUTINY AND TRYING TO TAKE SHELTER UNDER SECTION 44AE WHICH WAS ALSO N OT APPLICABLE TO THE ASSESSEE. VIDE SHOW CAUSE NOTICE DATED 16.12.2016 THE TURNOVER OF THE ASSESSEE WAS DETERMI NED AT RS.1,80,00,000/- WHEREAS THE TURNOVER WAS SHOWN BY THE ASSESSEE WAS ONLY RS.1,69,30,936/- AND ASSESSEE WAS CALLED UPON TO EXPLAIN THE SAME. THEREAFTER, THE AO AFTER ANALYZING THE COMPARATIVE NET PROFIT SHOWN OVER THE YEARS FROM 20 11-12 TO 2016-17 ESTIMATED INCOME OF THE ASSESSEE BY APPLYIN G GP OF 10% BY TAKING THE TURNOVER AT RS.1,80,00,000/- AND THUS MADE ADDITION OF RS.9,00,000/- TO THE INCOME OF THE ASSE SSEE WHILE FRAMING ASSESSMENT ORDER DATED 26.12.2016. 4. THE LD. CIT(A) AFFIRMED THE ORDER OF THE AO BY H OLDING THAT ADDITION MADE BY THE AO BY APPLYING RATE OF 10% OF THE GROSS RECEIPT IS REASONABLE KEEPING IN VIEW THE PAST HIST ORY OF THE ASSESSEE BY REJECTING THE CONTENTIONS OF THE ASSESS EE THAT ASSESSEE HAS ONLY 10 VEHICLES AND 11 TH VEHICLE WAS TAKEN ON HIRE WHICH DID NOT BELONG TO THE ASSESSEE AND THUS REJEC TED THE THEORY COINED BY THE ASSESSEE THAT INCOME SHOULD B E ASSESSED UNDER SECTION 44AE OF THE ACT. 5. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT IN THIS CASE THE ASSESSEE H AS FIRST FILED THE RETURN OF INCOME UNDER SECTION 44AD WHICH WAS SUBSEQUENTLY REVISED AND FILED UNDER SECTION 44AE. THE ASSESSEE HAS 11 TRUCKS WHEREAS IN THE PREVIOUS YEAR ASSESSEE HAD ONLY 10 TRUCKS. IT WAS CONTENDED BEFORE US THA T THE ITA NOS.2238 & 2239/M/2019 BHARAT SHYAMSUNDAR GUPTA 4 TURNOVER OF THE ASSESSEE WAS ONLY RS.1,69,30,936/- AND NOT RS.1,80,00,000/- AS ESTIMATED BY THE AO. THE LD. A .R. SUBMITTED THAT THE AO HAS INCLUDED THE AMOUNT OF CH EQUE DISHONOURED RS.4,99,778/- MATURITY PROCEEDS OF FDRS , REFUND OF LOANS ETC. WE FIND THAT THE SIMILAR SUBMISSIONS WERE MADE BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW AND IN SU CH TYPE OF CASES IF THE PERCENTAGE IS TO BE APPLIED ON THE TUR NOVER, THE TURNOVER HAS TO BE TAKEN EXCLUDING THE TRANSFER ENT RIES, MATURITY PROCEEDS OF FDR ,AMOUNT OF CHEQUES DISHONOURED AN D REFUND OF LOAN ETC. THEREFORE, WE ARE OF THE VIEW THAT TH E TURNOVER OF THE ASSESSEE SHOULD BE TAKEN AT RS.1,69,30,936/- AND IT WOULD BE REASONABLE AND FAIR TO BRING TO TAX THE INCOME OF T HE ASSESSEE @ 8% INSTEAD OF 10% ESTIMATED BY THE AUTHORITIES BELO W. ACCORDINGLY, WE DIRECT THE AO TO APPLY A RATE OF 8% ON RS.1,69,30,936/- BY SETTING ASIDE THE ORDER OF LD. CIT(A). 6. APPEAL IS PARTLY ALLOWED. ITA NO.2239/M/2019 7. THE ONLY ISSUE RAISED BY THE ASSESSEE IS AGAINST THE CONFIRMATION OF PENALTY FOR NOT GETTING THE ACCOUNT S AUDITED AND FILING THE AUDIT REPORT UNDER SECTION 44AB OF THE ACT WHEN THE GROSS TURNOVER OF THE ASSESSEE HAS EXCEEDED RS.1,00 ,00,000/-. 8. THE FACTS HAVE ALREADY BEEN NARRATED IN ITA NO.2238/M/2019. THE TURNOVER OF THE ASSESSEE EXCEE DED RS.1,00,00,000/- AND ACCORDINGLY THE AO ISSUED SHOW CAUSE NOTICE AS TO WHY THE PENALTY SHOULD NOT BE IMPOSED UNDER SECTION 271B OF THE ACT FOR NOT COMPLYING WITH THE PROVISIONS OF SECTION 44AB AND FINALLY LEVIED FOR PASSING THE ORDER UNDER ITA NOS.2238 & 2239/M/2019 BHARAT SHYAMSUNDAR GUPTA 5 SECTION 271B OF THE ACT. THE ASSESSEE SUBMITTED BE FORE THE AO THAT THE PROVISIONS OF SECTION 44AB WERE NOT APPLIC ABLE TO THE ASSESSEE AS THE RETURN HAS BEEN FILED UNDER SECTION 44AE OF THE ACT ON PRESUMPTIVE BASIS. THE ASSESSEE HAS FILED R EVISED RETURN OF INCOME DISCLOSING THE INCOME AT RS.10,52,940/- A S AGAINST THE INCOME OF RS.4,67,620/- FILED UNDER SECTION 139 (1) ON 28.07.2014. THE ASSESSEE CONTENDED THAT THE RETURN WAS FILED UNDER SECTION 139(5) OF THE ACT AND THEREFORE PROVI SIONS OF SECTION 271(B) WERE NOT APPLICABLE WHICH WERE BRUSH ED ASIDE BY THE AO AND IMPOSED A PENALTY OF RS.90,000/- FOR NOT GETTING ACCOUNTS AUDITED UNDER SECTION 44AB OF THE ACT AS T HERE WAS NO REASONABLE CAUSE FOR NON COMPLAINING WITH THE SAID PROVISION. 9. THE LD. CIT(A) AFFIRMED THE ORDER OF AO BY HOLDI NG THAT ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 44A B OF THE ACT AS THE TURNOVER HAS EXCEEDED RS.1,00,00,000/- AND I T WAS MANDATORY TO GET THE ACCOUNTS AUDITED AND THERE BEI NG NO REASONABLE CAUSE FOR NOT COMPLAINING WITH THE PROVI SIONS OF THE SECTION, THE PENALTY WAS RIGHTLY IMPOSED. 10. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT THE ASSESSEE IS A SMALL ASS ESSEE OPERATING 11 TRUCKS AND THE TURNOVER OF THE ASSESSE E IS RS.1,69,30,936/- AND APPARENTLY THE PROVISIONS OF SECTION 44AB WERE APPLICABLE. HOWEVER, THE ASSESSEE FAILED TO C OMPLY WITH THE SAID PROVISIONS UNDER THE WRONG BELIEF THAT IF THE INCOME ON THE VEHICLES ARE ESTIMATED ON PRESUMPTIVE BASIS UNDER S ECTION 44AE OF THE ACT THEN NO AUDIT IS REQUIRED TO BE CONDUCTE D UNDER SECTION 44AB. THE ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNTS AND WHATEVER INFORMATION WAS FILED BEFORE THE AO WERE ITA NOS.2238 & 2239/M/2019 BHARAT SHYAMSUNDAR GUPTA 6 FILED ON THE BASIS OF BANK STATEMENT. IN OUR OPINI ON, THIS IS A CASE OF SMALL TRUCK OPERATOR WHO ARE NOT ORGANIZED AND OPERATES IN A VERY DIFFERENT SET OF CIRCUMSTANCES. WE ARE, THEREFORE OF THE VIEW, THAT IN SUCH TYPE OF CASES WHEN THERE ARE NO BOOKS OF ACCOUNTS AND INCOME IS ESTIMATED ON ADHOC BASIS BY APPLYING GP ON THE BASIS OF PAST PATTERN OF EARNING OF THE A SSESSEE, THE ISSUE OF IMPOSITION OF PENALTY SHOULD NOT BE TAKEN LENIENTLY . WE THEREFORE DEEM IT FIT AND REASONABLE TO DELETE THE PENALTY ON THE GROUND THAT ASSESSEE WAS UNDER BONAFIDE BELIEF THAT THE TRUCK INCOME WAS EITHER TO BE ASSESSED UNDER SECTION 44AD OR 44AE OF THE ACT. ACCORDINGLY, THE PENALTY IS ORDERED TO BE DELETED AND THE APPEAL IS ALLOWED. 11. IN THE RESULT, ITA NO.2238/M/2019 IS PARTLY ALL OWED AND ITA NO.2239/M/2019 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20.08.2019. SD/- SD/- (MAHAVIR SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 20.08.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.