Sri Naresh Kumar Agarwal, Bokaro Steel City V. ITO,Ward-3(2), Bokaro Steel City

ITA 236/RAN/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8268 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 18-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NISHA SINGH MARR
• Assessee Lawyers: D. PODDAR
• Keywords: Source of fund
• Section: 68; 143(3); 133A; 234B; 143(1); 143(2); 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RANCHI BENCH, RANCHI BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER& MS. MADHUMITA ROY, JUDICIAL MEMBER I.T.A. NO. 236/RAN/2018 (ASSESSMENT YEAR: 2015-16) SRI NARESH KUMAR AGARWAL M/S NUTKHUT SWEETS, HD-20, CITY CENTRE, SECTOR- 4, BOKARO STEEL CITY 827004 VS. ITO WARD-3(2), BOKARO [PAN NO. ABY PA2 027 Q] ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI D. PODDAR, ADV. RESPONDENT BY : SHRI NISHA SINGHMARR, JCIT (D.R.) DATE OF HEARING 05.11.2019 DATE OF PRONOUNCEMENT 23 . 0 1 . 20 20 O R D E R PER MS. MADHUMITA ROY - JM: THE INSTANT APPEAL AT THE BEHEST OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 18.05.2018 PASSED BY THE LD. CIT(APPEAL S), HAZARIBAGH, JHARKHAND ARISING OUT OF THE ORDER DATED 29.12.2017 PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT (HEREINAFTER REFERRED AS TO THE ACT) PASSED BY THE ITO WARD-3(2), BOKARO FOR A.Y. 2015-16. 2. THE ASSESSEE HAS FILED THE INSTANT APPEAL WITH T HE FOLLOWING GROUNDS:- 1. FOR THAT LD. CIT(A) WAS NOT JUSTIFIED IN CONFIR MING THE ADDITION MADE BY LD. AO ON ACCOUNT OF LOAN RECEIVED FROM M/S ACRO WTECH ENTERPRISES OF RS. 1,00,000/- THROUGH BANK. COMPLETE DETAILS SUCH AS LOAN CONFIRMATION, BANK STATEMENT, AND OTHER DETAILS WERE PRODUCED BEFORE L D. AO. ADDITION WAS MADE U/S 68 DOUBTING THE SOURCE OF FUNDS IN THE HANDS OF M/S ACROWTECH ITA NO.236/RAN/2018 SRI NARESH KUMAR AGARWAL VS. ITO ASST.YEAR 2015-16 - 2 - ENTERPRISES. THERE WAS NO AMBIGUITY IN THE LOAN RE CEIVED, AS SUCH, THE ADDITION MADE IS ILLEGAL AND UNJUSTIFIED. 2. FOR THAT LD. AO WAS NOT JUSTIFIED IN CONSIDERING THE CASH FOUND AT THE TIME OF SURVEY AS CASH RECEIPT OF THE DAY AND THERE BY CALCULATING THE ANNUAL GROSS RECIPE OF THAT BASIS. DURING THE COURSE OF S URVEY CASH OF RS. 47,957/- WAS FOUND AT THE SHOP OF THE ASSESSEE. LD. AO PRESU MED THE SAME TO THE CASH SALES OF THE DAY AND CALCULATED THE GROSS RECEIPT O F THE ASSESSEE AS 47,957 X 365 = RS. 1,75,04,305/- AND FURTHER ESTIMATED A PRO FIT 11.63%. PROFIT APPLIED IS UNREASONABLE. ASSESSEE DECLARED A HIGHER PROFIT FOR THE CURRENT YEAR SO AS TO COVER UP THE MATTER POST SURVEY AND TO AVOID ANY UNCALLED FOR LITIGATION. 3. FOR THAT THE CASH FOUND AT THE TIME OF SURVEY CA NNOT BE CONSIDERED AS CASH SALES OF THE DAY. THERE IS ALWAYS CERTAIN OPE NING BALANCE OF CASH WHICH IS KEPT IN THE SHOP. ASSESSEE DEALS IN SWEETS AND CONFECTIONERIES ITEMS. THE SALES OF THE SAME VARY FROM DAY TO DAY, SEASON TO S EASON AND MONTH TO MONTH DEPENDING UPON FESTIVALS AND MARRIAGE SEASONS ETC. THE SURVEY WAS CONDUCTED ON 09/02/2015I.E THE MONTH OF FEBRUARY. IN THE MONTH OF FEBRUARY, LOTS OF MARRIAGES TAKE PLACE. FURTHER, M ANY FESTIVALS SUCH AS SHIVRATRI, HOLI, VALENTINES DAY ETC ARE LINED UP. AS SUCH, IT CAN BE SAID THAT IN THE MONTH OF FEBRUARY THE SALE ARE ON THE HIGHER SI DE AND AS SUCH, THE SALES OF FEBRUARY CANNOT BE CONSIDERED EQUAL TO THE SALES MA DE IN OFF SEASON TIME SUCH AS IN MONTH OF JUNE ETC, WHERE IN PEAK SUMMER THERE IS NO WEDDING TIME AND THE SWEETS TEND TO PERISH FAST. AS SUCH, ADDIT ION MADE BY LD AO CONSIDERING THE SALE AS ON DATE OF SURVEY AND SALE OF EACH DAY IS ILLEGAL AND INCORRECT. 4. FOR THAT INTEREST U/S 234A/B SHOULD BE CHARGED O N THE RETURNED INCOME AND NOT ON THE ASSESSED INCOME FOLLOWING THE DECISION OF HONBLE JHARKHAND HIGH COURT. 5. FOR THAT OTHER GROUNDS IN DETAIL SHALL BE ARGUED AT THE TIME OF HEARING. GROUND NO.1:- 3. THE CONFIRMATION OF THE ADDITION TO THE TUNE OF RS. 1,00,000/- UNDER SECTION 68 HAS BEEN CHALLENGED BEFORE US. THE BRIE F FACT LEADING TO THE CASE IS THIS THAT THE ASSESSEE HAVING A BUSINESS OF SWEE TS IN THE NAME AND STYLE OF M/S. NUTKHUT SWEETS FILED ITS RETURN OF INCOME ON 3 1.08.2015 DECLARING TOTAL INCOME AT RS. 9,51,810/- FOR THE YEAR UNDER CONSIDE RATION THROUGH ELECTRONIC ITA NO.236/RAN/2018 SRI NARESH KUMAR AGARWAL VS. ITO ASST.YEAR 2015-16 - 3 - MEDIA WHICH WAS PROCESSED UNDER SECTION 143(1) OF T HE ACT ON 22.07.2017. IT IS RELEVANT TO MENTION THAT PURSUANT TO THE AUTH ORIZATION ISSUED BY THE JOINT COMMISSIONER OF INCOME TAX, RANGE-3, BOKARO, A SURVEY WAS OPERATED UNDER THE PROVISION OF SEC. 133A OF THE AC T AT THE BUSINESS PREMISES OF THE ASSESSEE ON 09.02.2015 AND, THEREFO RE, THE CASE WAS SELECTED FOR COMPULSORY SCRUTINY RELEVANT NOTICES UNDER SECT ION 143(2) WAS ALSO ISSUED. THE FIRST ISSUE CROPPED UP RELATING TO UNS ECURED LOAN OF RS. 1,00,000/- RECEIVED FROM ONE M/S. ACROWTECH ENTERPR ISES BY THE ASSESSEE DURING THE ASSESSMENT YEAR 2015-16. SINCE THE ASSE SSEE COULD NOT PRODUCE INCOME TAX RETURN/BALANCE SHEET, P&L ACCOUNT OF THE SAID M/S. ACROWTECH ENTERPRISES, THE SAID AMOUNT WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE ACT FOR GENUIN ENESS OF THE TRANSACTION NOT HAVING BEING PROVED. IN APPEAL THE SAID WAS CO NFIRMED BY THE LD. CIT(A). 4. AS STATED BY THE LD. ADVOCATE APPEARING FOR THE ASSESSEE THAT THE SAID AMOUNT HAS BEEN REPAID BACK BY THE ASSESSEE IN THE MONTH OF MAY, 2015 WHICH ALSO APPEARS FROM THAT PARTICULAR BANK STATEM ENT OF THE OWNER ON RECORD, HENCE, WE DO NOT FIND ANY MERIT IN MAKING S UCH ADDITION BY THE AUTHORITIES BELOW. THE ADDITION IS, THUS, HEREBY D ELETED. GROUND NO.2:- 5. THE SECOND GROUND RELATES TO ADDITION TO THE TUN E OF RS. 20,35,750/- UPON ESTIMATION OF INCOME AT 11.63% OF THE TURNOVER OF RS. 1,75,47,305/- AS ASSESSED BY THE REVENUE. ITA NO.236/RAN/2018 SRI NARESH KUMAR AGARWAL VS. ITO ASST.YEAR 2015-16 - 4 - THE CRUX OF THE MATTER IS THAT DURING THE COURSE O F ASSESSMENT PROCEEDING UPON PERUSAL OF THE RETURN OF INCOME FIL ED FOR THE A.Y. 2015-16 THAT THE ASSESSEE HAS SHOWN PROFIT OF RS. 10,88,935 /- I.E. 11.63% ON TOTAL SALE OF RS. 93,60,175/- THE ASSESSEE WAS DIRECTED T O FURNISH THE DETAILS OF THE SALE, SALE REGISTER, DETAILS OF MATERIAL PURCHASED ETC. IN THE ABSENCE OF THE DETAILS PRODUCED BY THE ASSESSEE THE LD. AO ESTIMAT ED THE TURNOVER AS WELL AS THE PROFIT THEREON ON THE AVERAGE DAY SALE OF SW EETS/CONFECTIONERIES FOR THE WHOLE YEAR ON THE BASIS OF THE FOLLOWING FACTS: - (I) CASH TO THE TUNE OF RS. 47,957/- WAS FOUND DURI NG THE SURVEY FROM THE BUSINESS PREMISES OF THE ASSESSEE. (II) THE STATEMENT GIVEN BY NARESH KUMAR AGARWAL TO THIS EFFECT THAT HE GAVE THE MONEY OF PER DAY SALE TO HIS FATHER SRI RAM PRA TAP AGARWAL AND HE IS HAVING NO KNOWLEDGE ABOUT WHAT HIS FATHER DOES OR W HERE HE PUT THE MONEY OF DAILY SALE. (III) IT IS FOUND FROM THE SURVEY OPERATION AS WELL AS THE THIRD PARTY VERIFICATION THAT RS. 40,000/- TO 50,000/- HAS BEEN DEPOSITED IN FOUR BANK ACCOUNTS ON DAILY BASIS. SINCE RAM PRATAP AGARWAL IS RECEIVED HOUSE RENT OF RS. 20,000/- PER MONTH AND A SALARY FROM NUT KHUT SWEETS OF RS. 2,000/- PER MONTH THERE WAS TOTAL MISMATCH OF THE MONEY DEPOSITED IN THE AC COUNT AS THE OBSERVATION MADE BY THE LD. AO. (IV)THE LD. AO FURTHER CONSIDERED THE PERISHABLE ST OCK CONTAINING SWEETS/CONFECTIONERIES VALUED AT RS. 2,27,276/-. ON THE ABOVE BASIS OF THE ONE DAY SALE OF RS. 47,9 57/- THE LD. AO WORKED OUT TO RS. 1,75,04,305/- AS THE SALE OF THE ENTIRE YEAR AND ESTIMATED ITA NO.236/RAN/2018 SRI NARESH KUMAR AGARWAL VS. ITO ASST.YEAR 2015-16 - 5 - PROFIT FOR THE YEAR UNDER CONSIDERATION AT 11.63% O F THE TOTAL TURNOVER RESULTING INTO 20,35,750/-. 6. WE HAVE HEARD THE RESPECTIVE PARTIES AND ALSO PE RUSED THE RELEVANT MATERIALS AVAILABLE ON RECORD. THE FACT THAT THE BUSINESS OF THE ASSESSEE IS OF S ALE OF SWEET/CONFECTIONERIES WHICH IS ALSO DEPENDING UPON THE FESTIVE SEASON WHICH VARIES TIME TO TIME. THE SALE VARIES DURING T HE PERIOD OF MARRIAGE CEREMONY AS POINTED OUT BY THE LD. AR CANNOT ALSO B E BRUSHED ASIDE. THUS, THE OBJECT FOUND AT THE TIME OF SURVEY, BY NO MEANS CANNOT BE CONSIDERED AS SALE OF DAY NEITHER SALES OF THE ENTIRE YEAR CANNOT BE ESTIMATED ON THAT BASIS AS WE FIND FROM THE RECORDS. FURTHER THAT THE ASSESSEE HAS MADE A CATEGORICAL S TATEMENT BEFORE THE CIT(A) BY AND UNDER ITS REPRESENTATION DATED 21.12. 2017 THAT IT IS A REGULAR PRACTICE OF ALL THE BUSINESS SHOP THAT FEW AMOUNT I S LEFT IN THE COUNTER FOR RETURNING CHANGE TO CUSTOMER WHICH OUGHT TO HAVE BE EN CONSIDERED BY THE REVENUE. THE ASSESSEE REGULARLY MAINTAINED CASH OF RS. 15,000/- TO 20,000/- IN THE COUNTER FOR THE NEXT DAY USE AS A B USINESS PRACTICE THOUGH POINTED OUT BY THE ASSESSEE NO IOTA OF OBSERVATION IS FORTHCOMING FROM THE ORDERS PASSED BY THE AUTHORITIES BELOW ON THIS ASPE CT. THUS, NO CONSIDERATION THEREON WAS ALSO MADE EITHER BY THE L D. AO OR CIT(A). THEREFORE, TAKING INTO CONSIDERATION THE ENTIRE ASP ECT OF THE MATTER WE FIND NO JUSTIFICATION IN CALCULATING THE TURNOVER IN THE MANNER AS HAS BEEN DONE BY THE LD. AO WHICH HAS ULTIMATELY BEEN CONFIRMED B Y THE FIRST APPELLATE AUTHORITY WITHOUT CONSIDERING THE ABOVE FACTS IN IT S PROPER PERSPECTIVE. ITA NO.236/RAN/2018 SRI NARESH KUMAR AGARWAL VS. ITO ASST.YEAR 2015-16 - 6 - HENCE, ON THE BASIS OF ASSUMPTION, ESTIMATION OF TU RNOVER AND PROFIT THEREON HAS NO LEG TO STAND UPON. THUS, THE ADDITION THERE ON IS HEREBY DELETED. GROUND NO.3:- 7. THIS GROUND RELATES TO THE INTEREST CHARGEABLE UNDER SECTION 234B OF THE ACT. THE LD. AR IS DIRECTED TO CHARGE INTEREST ON THE RETURNED INCOME ONLY TAKING INTO CONSIDERATION THE JUDGMENT PASSED BY TH E HONBLE JURISDICTIONAL JHARKHAND HIGH COURT IN THE CASE OF AJAY PRAKASH VE RMA VS. ITO IN TA NO. 38 OF 2010 IN ACCORDANCE WITH LAW. THIS GROUND OF APPEAL FILED BY THE ASSESSEE IS THUS ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE ASSESSEES APPEAL IS, THEREFO RE, ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER PRONOUNCED IN OPEN COURT ON 23/01/2020 SD/- SD/- (PRADIP KUMAR KEDIA) (MS. MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 23/01/2020 TANMAY, SR. PS E TRUE COPY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)- 5. , ! ' , #$%% / DR, ITAT, RANCHI 6. &' () / GUARD FILE. / BY ORDER, (SR. PRIVATE SECRETARY) / ITAT, RANCHI