Pyare Lal Gabra, Gwalior V. I.T.O., Ward-1(1), Gwalior

ITA 239/AGR/2012

• Counselvise Citation: 23920314 RSA 2012
• Duration Of Justice: 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 15-10-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 28-05-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KUM ANURADHA
• Assessee Lawyers: NAVIN GARGH
• Keywords: Unexplained investment; Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 270/AGRA/2012 ASSTT. YEAR : 2002-03 INCOME-TAX OFFICER, VS. SHRI PYARE LAL GABRA, 1(1), GWALIOR. PROP. M/S. GABRA MARKETING, KAMPOO ROAD, LASHKAR, GWALIOR. (PAN : AJDPG 3745 N) ITA NO. 239/AGRA/2012 ASSTT. YEAR : 2003-04 SHRI PYARE LAL GABRA, VS INCOME-TAX OFFICER, PROP. M/S. GABRA MARKETING, 1(1), GWALIOR. KAMPOO ROAD, LASHKAR, GWALIOR. (APPELLANT) (RESPONDENT) REVENUE BY : KUM. ANURADHA, JR. D.R. ASSESSEE BY : SHRI NAVIN GARGH, ADVOCATE. DATE OF HEARING : 15.10.2012 DATE OF PRONOUNCEMENT OF ORDER : 19.10.2012 ORDER PER BHAVNESH SAINI, J.M.: BOTH THE APPEALS BY THE REVENUE AND THE ASSESSEE AR E DIRECTED AGAINST THE COMMON ORDER OF LD. CIT(A), GWALIOR DATED 22.03.201 2 FOR THE ASSESSMENT YEARS 2002-03 AND 2003-04. ITA NO. 270 & 239/AGRA/2012 2 2. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND CONSIDERED TH E MATERIAL ON RECORD. BOTH THE APPEALS ARE DECIDED AS UNDER : ITA NO. 270/AGRA/2012 : 3. THE REVENUE CHALLENGED THE ORDER OF THE LD. CIT( A) IN DELETING THE ADDITION OF RS.3,11,860/- ON ACCOUNT OF ESTIMATE OF NET PROFIT AND IN DELETING THE ADDITION OF RS.15,00,000/- ON ACCOUNT OF UNEXPL AINED INVESTMENT U/S. 69 OF THE IT ACT. 4. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE AO R EOPENED THE ASSESSMENT U/S. 148 OF THE IT ACT AND ASSESSEE IN RESPONSE THE RETO FILED THE RETURN OF INCOME AT RS.88,140/-. THE AO NOTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2005-06 IN THE CASE OF THE ASSESSEE, IT HAS BEEN ADMITTED BY THE ASSESSEE THAT HE HAS BEEN CARR YING ON THE BUSINESS OF WHOLESALE TRADING IN BIRI, CIGARETTES ETC. SINCE 19 98, BUT NO RETURN OF INCOME HAS BEEN FILED FOR THE YEAR UNDER CONSIDERATION NOR ANY BOOKS OF ACCOUNT HAVE BEEN MAINTAINED. THE STATEMENT OF THE ASSESSEE WAS ALSO RECORDED REGARDING SOURCE OF INCOME. THE ASSESSEE HAS SHOWN TOTAL TURN OVER OF RS.88,13,999/- OF ITA NO. 270 & 239/AGRA/2012 3 WHICH PROFIT MARGIN WAS SHOWN AT 1% DECLARING PROFI T OF RS.88,140/-. HOWEVER, NO BASIS OF THE TURNOVER, BILLS, VOUCHERS AND BOOKS OF ACCOUNT WERE PRODUCED. IN THE STATEMENT OF THE ASSESSEE, IT WAS EXPLAINED THAT THE TURNOVER OF THE ASSESSEE HAS BEEN SHOWN ON THE BASIS OF THE TURNOVER DISCLOSED TO THE SALES TAX DEPARTMENT AND THE ACCOUNTS COULD NOT BE PRODUCED BECAUSE THE ACCOUNTANT WAS OUT OF STATION. THE AO ACCORDINGLY, ESTIMATED THE TURNOVER AT RS.1.00 CRORE AND BY APPLYING NET PROFIT RATE OF 4% , COMPUTED THE BUSINESS INCOME AT RS.4,00,000/- AND AFTER GIVING SET OFF OF THE AMOUNT DISCLOSED IN THE RETURN OF INCOME ADDITION OF RS.3,11,860/- WAS MADE . THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LD. CIT(A) AND IT WAS SUBMI TTED THAT SINCE THE TURNOVER HAS BEEN ACCEPTED BY THE COMMERCIAL TAX DEPARTMENT, THEREFORE, TOTAL TURNOVER SHOULD NOT BE DISTURBED. COPY OF THE ORDER OF COMMERCIAL TAX DEPARTMENT WAS PRODUCED. IT WAS FURTHER SUBMITTED T HAT IN THE ABSENCE OF BOOKS OF ACCOUNT IN THE CASE OF RAJENDRA PRASAD AGA RWAL, THE TRIBUNAL DIRECTED TO APPLY G.P. RATE OF 0.7% AND TO ALLOW CR EDIT OF EXPENDITURE AT THE RATE OF 0.5% ON THE TOTAL TURNOVER. COPY OF THE ORD ERS OF THE TRIBUNAL WAS PRODUCED BEFORE THE LD. CIT(A). THE LD. CIT(A) ACCE PTED THE CONTENTION OF THE ASSESSEE AND DELETED THE ADDITION OF RS.3,11,860/-. FURTHER, THE AO MADE ADDITION OF RS.15,00,000/- ON ACCOUNT OF UNEXPLAINE D INVESTMENT IN BUSINESS. THE AO AT THE ASSESSMENT STAGE ASKED THE ASSESSEE T O EXPLAIN THE SOURCE OF ITA NO. 270 & 239/AGRA/2012 4 INVESTMENT IN BUSINESS. THE ASSESSEE EXPLAINED THAT THE BUSINESS WAS COMMENCED IN 1998 BY HIS FATHER AND SINCE THEN HE I S DOING THE BUSINESS, BUT NO EVIDENCE OF SOURCE OF INVESTMENT WAS FILED. THER EFORE, 15% OF THE TURNOVER ESTIMATED BY THE AO WAS CONSIDERED AS UNDISCLOSED I NVESTMENT IN THE BUSINESS OF ASSESSEE AND ADDITION OF RS.15,00,000/- WAS MADE U/S. 69 OF THE IT ACT. 5. THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEF ORE THE LD. CIT(A) AND SUBMITTED THAT THE COMMERCIAL TAX DEPARTMENT GRANTE D REGISTRATION TO THE ASSESSEE IN 1997. THEREFORE, THE ADDITION OF UNDISC LOSED INVESTMENT IN THE ASSESSMENT YEAR UNDER APPEAL IS UNJUSTIFIED. THE LD . CIT(A) ACCEPTED THE CONTENTION OF THE ASSESSEE BECAUSE IT WAS INCUMBENT UPON THE AO TO FIRST ESTABLISH THE INVESTMENT MADE DURING THE ASSESSMENT YEAR UNDER APPEAL AND THEN ONLY ADDITION COULD BE MADE. THE ADDITION WAS ACCORDINGLY, DELETED. 6. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE AR E OF THE VIEW THAT THE ADDITION OF RS.15,00,000/- HAS BEEN RIGHTLY DELETED BY THE LD. CIT(A). THE ASSESSEE ESTABLISHED ON RECORD THAT HE WAS DOING BU SINESS SINCE LONG. THEREFORE, THERE WAS NO OCCASION TO CONSIDER UNEXPL AINED INVESTMENT IN THE ASSESSMENT YEAR UNDER APPEAL. THE AO HAS NOT BROUGH T ANY EVIDENCE ON RECORD TO JUSTIFY HIS CONCLUSION THAT THE ASSESSEE MADE ANY UNDISCLOSED ITA NO. 270 & 239/AGRA/2012 5 INVESTMENT IN THE ASSESSMENT YEAR UNDER APPEAL. THE AO MERELY ON HYPOTHETICAL CONSIDERATION AND ON IMAGINARY BASIS, CONSIDERED THE UNEXPLAINED INVESTMENT WHICH HAS RIGHTLY BEEN DELET ED BY THE LD. CIT(A) IN THE ABSENCE OF ANY EVIDENCE ON RECORD. WE DO NOT IN TEND TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A) IN DELETING THE ADDITION OF RS.15,00,000/-. GROUND NO.2 OF APPEAL OF THE REVENUE IS, ACCORDINGLY, DISM ISSED. 6.1 AS REGARDS THE ADDITION OF GROSS PROFIT, THOUGH IT IS ADMITTED FACT THAT SALES OF THE ASSESSEE AT RS.88,13,999/- HAVE BEEN A CCEPTED BY THE COMMERCIAL TAX DEPARTMENT, BUT THE ASSESSEE FILED TO PRODUCE A NY BOOKS OF ACCOUNT, BILLS, VOUCHERS BEFORE THE AO TO VERIFY THE PROFIT EARNED BY THE ASSESSEE OUT OF THE WHOLESALE BUSINESS. THE ASSESSEE CLAIMED TO HAVE EA RNED PROFIT AT THE RATE OF 1%, BUT NO BASIS OR EVIDENCE WAS PRODUCED. THE LD. CIT(A) MERELY FOLLOWING THE ORDER IN THE CASE OF RAJENDRA PRASAD AGARWAL (S UPRA) DELETED THE ADDITION IN THE CASE OF THE ASSESSEE. SINCE THERE WAS NO BAS IS, WHATSOEVER, FOR CLAIMING PROFIT RATE OF 1% IN THE CASE OF THE ASSESSEE, THER EFORE, CONSIDERING THE RETURN OF INCOME FILED BY THE ASSESSEE, IT WOULD HAVE BEEN NECESSARY FOR THE LD. CIT(A) TO MAKE PART OF THE ADDITION IN ORDER TO DO JUSTICE BETWEEN THE PARTIES. IN THE ABSENCE OF ANY EVIDENCE ON RECORD FOR PROVIN G PROFIT RATE OF 1% IN THE CASE OF ASSESSEE, WE ARE OF THE VIEW THAT IT WOULD HAVE BEEN PROPER AND ITA NO. 270 & 239/AGRA/2012 6 REASONABLE TO MAKE LUMP SUM ADDITION AGAINST THE AS SESSEE IN STEAD OF 4% PROFIT RATE APPLIED BY THE AO. WE ACCORDINGLY, MODI FY THE ORDER OF THE LD. CIT(A) IN DELETING THE ENTIRE ADDITION AND DIRECT T HAT ADDITION OF RS.50,000/- WOULD SERVE THE PURPOSE. WE, THEREFORE, DIRECT THAT INSTEAD OF ADDITION OF RS.3,11,860/-, THE AO SHALL MAKE ADDITION OF RS.50, 000/- IN ALL. THE ORDERS OF THE AUTHORITIES BELOW TO THAT EXTENT ARE MODIFIED. GROUND NO. 1 OF APPEAL OF THE REVENUE IS ACCORDINGLY PARTLY ALLOWED. IN THE R ESULT THE DEPARTMENTAL APPEAL IS PARTLY ALLOWED. ITA NO. 239/AGRA/2012 : 7. IN THE APPEAL OF THE ASSESSEE, THE ADDITION OF R S.1,00,000/- HAS BEEN CHALLENGED ON ACCOUNT OF UNEXPLAINED INVESTMENT IN FIXED DEPOSITS WITH UCO BANK. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS FOUND THAT THE ASSESSEE HAS FIXED DEPOSITS OF RS.1,00,000/- WITH U CO BANK. THE ASSESSEE FAILED TO ADDUCE ANY EVIDENCE REGARDING SOURCE OF I NVESTMENT MADE IN FDR. THE ASSESSEE CLAIMED THE INVESTMENT OUT OF PAST SAV INGS BUT NO EVIDENCE WAS FILED IN SUPPORT OF THE SAME. THEREFORE, THE AO MAD E ADDITION OF RS.1,00,000/- U/S. 69 OF THE IT ACT CONSIDERING IT TO BE UNDISCLOSED INVESTMENT IN FDRS. THE ASSESSEE EXPLAINED BEFORE THE LD. CIT( A) THAT HE WAS 40 YEARS OF AGE DURING THE FINANCIAL YEAR RELEVANT TO THE ASSES SMENT YEAR UNDER APPEAL AND ITA NO. 270 & 239/AGRA/2012 7 HAS BEEN DOING BUSINESS OF WHOLESALE SINCE 1997. TH EREFORE, OUT OF HIS SAVINGS, HE HAS MADE INVESTMENT IN FDR. THE LD. CIT (A) DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE BECAUSE THE ASSESSEE FAI LED TO GIVE ANY EVIDENCE IN RESPECT OF THE INVESTMENT IN THE FDR. NO BOOKS OF A CCOUNT, NO CASH FLOW STATEMENT, NO CAPITAL ACCOUNT ETC. WERE FILED IN RE SPECT OF AVAILABILITY OF CASH / SAVINGS OF THE ASSESSEE. THE LD. CIT(A) CONSIDERING THAT AFTER MEETING THE HOUSEHOLD EXPENSES, HELD THAT THE ASSESSEE WOULD NO T BE HAVING ANY FUNDS WITH HIM AND ACCORDINGLY, CONFIRMED THE ADDITION. 8. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A). ON THE OTHER HAND, THE LD. DR RELIE D UPON THE ORDER OF THE AUTHORITIES BELOW. 9. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE ASSESSEE. THE ASSESSEE FAILED TO PRODUCE ANY EVIDENCE BEFORE THE AO TO EXPLAIN THE SOURCE OF INVESTMENT IN FDR. EVEN BEFORE THE LD. CIT(A), THE ASSESSEE DID NOT PRODUCE BOOKS OF ACCOU NT, CASH FLOW STATEMENT OR CAPITAL ACCOUNT IN SUPPORT OF THE CONTENTION. THERE FORE, THERE IS NO EVIDENCE AVAILABLE ON RECORD TO JUSTIFY THE PAST SAVINGS AND AVAILABILITY OF FUNDS WITH THE ASSESSEE. EVEN BEFORE US, NO EVIDENCE HAS BEEN PRODUCED. THEREFORE, WE ITA NO. 270 & 239/AGRA/2012 8 DO NOT INTEND TO INTERFERE WITH THE ORDER OF THE LD . CIT(A) IN CONFIRMING THE ADDITION. IN THE RESULT, APPEAL OF THE ASSESSEE FAI LS AND IS DISMISSED. 10. IN THE RESULT, THE DEPARTMENTAL APPEAL IS PARTL Y ALLOWED AND THE APPEAL OF THE ASSESSEE IS DISMISSED. COPY OF ORDER BE PLACED IN EACH FILE. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY