Income Tax Officer-2(2), Lucknow V. Shri Mohit Pratap Singh, Unnao

ITA 259/LKW/2014

• Counselvise Citation: 25923714 RSA 2014
• Duration Of Justice: 1 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 25-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 07-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K R RASTOGI
• Keywords: Business income; Business expenditure; Peak credit

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.259/LKW/2014 ASSESSMENT YEAR 2008-09 SHRI MOHIT PRATAP SINGH, 1/219, LDA FLATS, WAZIR HASAN ROAD, LUCKNOW (PRESENT ADDRESS GAURA KATHERWA POST JAITIPUR, DISTT.-UNNAO VS ITO-2(2), LUCKNOW PAN ATFPS 4361 Q (RESPONDENT) (APPELLANT) SHRI R.K. RAM, DR APPELLANT BY SHRI K.R. RASTOGI, CA RESPONDENT BY 25/08/2015 DATE OF HEARING 24 /0 9 /2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS A REVENUES APPEAL DIRECTED AGAINST THE OR DER OF LD. CIT(A)-I, LUCKNOW DATED 28.01.2014 FOR THE AY 2008-09. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.20,71,673/- WITHOUT APP RECIATING THE FACT THAT EVEN DURING REMAND REPORT PROCEEDING THE ASSESSEE COULD PRODUCE ONLY ONE PERSON IN SUPPORT O F HIS BUSINESS ACTIVITY. 2. APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUN D OF APPEAL, AS STATED ABOVE AS AND WHEN NEED OF DOING S O ARISES WITH THE PRIOR PERMISSION OF THE HONBLE BENCH. 3. LD. DR OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER. HE ALSO SUBMITTED THAT ON PAGES 7 TO 8 OF PAPER BOOK IS REM AND REPORT SUBMITTED BY 2 THE AO BEFORE LD. CIT (A). LD. AR OF THE ASSESSEE S UPPORTED THE ORDER OF LD. CIT(A). HE HAS ALSO PLACED RELIANCE ON THE FOLLOWIN G JUDICIAL PRONOUNCEMENTS: 1. CIT VS. PRADEEP SHANTILAL PATEL REPORTED IN 221 TAXMAN 436 (GUJ) 2. CIT VS. SURINDER PAL ANAND (P&H) REPORTED IN 192 TAXMAN 264 (P&H) 3. ITAT LUCKNOW BENCH IN ITO VS. KAMAL KUMAR MISHRA REPORTED IN 143 ITD 686 (LKO). 4. ITAT LUCKNOW B BENCH ITO VS. SHRI HARIKESH SINGH REPORTED IN 102/LKW/2015. 5. ORDER OF HONBLE ALLAHABAD HIGH COURT IN CIT (KA NPUR) VS. FERTILIZER TRADERS REPORTED IN 222 TAXMAN 162 (ALL.). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIN D THAT THE ISSUE IN DISPUTE WAS DECIDED BY THE LD. CIT(A) IN PARA 7 OF HIS ORDER, WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: 7. I HAVE CONSIDERED THE MATTER. IT IS NOTED THAT T HE APPELLANT WAS CARRYING ON THE BUSINESS OF SUPPLY OF BUILDING MATE RIALS AND HAS DECLARED PROFIT ON ESTIMATED BASIS U/S 44AF OF THE ACT AMOUNTING TO RS. 2,10,240/- WHICH IS 9.5% OF GROSS RECEIPTS FROM BUSINESS OF RS. 22,08,000/-. THE AO HAS NOT GIVEN ANY BASIS FOR EST IMATING THE PROFIT FROM BUSINESS AT RS. 4 LAKHS. IN FACT, THE A O ADMITTED THAT THE INCOME IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR WAS ALSO DECLARED BY THE ASSESSEE FROM THE SAME BUSINESS ON ESTIMATE BASIS AT RS.1,30,080/- (13.30% OF RECEIPTS OF RS.9,78,465 /-). IN THE RETURN FOR AY 2007-08 AT ITEM NO. 51 (PART A-P&L) WHICH IS APPLICABLE TO THE CASES WERE REGULAR BOOKS OF ACCOUNT OF BUSINESS ARE NOT MAINTAINED, THE APPELLANT HAS MENTIONED THE ABOVE F IGURES OF GROSS RECEIPTS AND NET PROFIT. IN SUPPORT OF HIS BUSINESS ACTIVITY THE APPELLANT HAS FILED CONFIRMATIONS FROM FOUR PERSONS ALONG WITH THEIR PANS, ADDRESSES, PROOF OF IDENTITY, BANK STATEMENTS ETC. ONE OF THE PERSONS, MR. ARVIND BAHADUR SINGH WAS ALSO PRODUCED BEFORE THE AO WHO IN THE STATEMENT RECORDED, CONFIRMED THE AVERME NTS OF THE APPELLANT. THE APPELLANT DID NOT PRODUCE OTHER THRE E PARTIES BEFORE THE AO. BUT INSTEAD OF SHIFTING THE ONUS ON THE APP ELLANT THE AO OUGHT TO HAVE SUMMONED THEM AND VERIFIED THE FACTS. IT IS ALSO NOTED THAT THE CASH DEPOSITS AND WITHDRAWALS HAVE B EEN MADE REGULARLY WHICH INDICATE THAT THE BUSINESS OF SUPPL YING BUILDING MATERIAL HAS BEEN CARRIED OUT BY THE APPELLANT THRO UGHOUT THE YEAR 3 ON REGULAR BASIS. THE ALTERNATIVE ARGUMENT OF THE A PPELLANT THAT IF THE CONCEPT OF PEAK THEORY IS ADOPTED TO COMPUTE TH E INCOME OF THE APPELLANT THE MAXIMUM CREDIT IN THE BANK ACCOUNT NO . 13661 IS RS. 2,30,316/- WHICH IS CLOSE TO THE INCOME DECLARED BY THE APPELLANT IS ALSO A COGENT AND PLAUSIBLE EXPLANATION. FURTHER TH E AO DID NOT RELY ON ANY MATERIAL EVIDENCE TO HOLD THAT THE DEPOSITS MADE IN THE TWO BANK ACCOUNTS WERE UNEXPLAINED OR UNDISCLOSED INCOM E OF THE ASSESSEE. IN THE CASE OF CIT V. SURINDER PAL ANAND, (ITA NO. 156 OF 2010 DATE OF DECISION 29.06.2010) THE HON'BLE PUNJA B & HARYANA HIGH COURT HAS HELD THAT ONCE UNDER THE SPECIAL PRO VISION, EXEMPTION FROM MAINTAINING BOOKS OF ACCOUNT HAS BEE N PROVIDED AND PRESUMPTIVE TAX @ 8% OF THE GROSS RECEIPT ITSEL F IS THE BASIS FOR DETERMINING THE TAXABLE INCOME, THE ASSESSEE WAS NO T UNDER OBLIGATION TO EXPLAIN INDIVIDUAL ENTRY OF CASH DEPO SIT IN THE BANK UNLESS SUCH ENTRY HAD NO NEXUS WITH THE GROSS RECEI PTS. IN VIEW OF THE ABOVE, IT IS HELD THAT SINCE THE TOTAL DEPOSITS IN THE TWO BANK ACCOUNTS AMOUNTING TO RS. 20,87,195/- (RS. 19,31,04 4 - 1,85,000 + 3,41,151) WERE LOWER THAN THE BUSINESS RECEIPTS OF RS. 22,08,000/- DECLARED BY THE ASSESSEE AND IN THE BANK STATEMENT THERE WERE REGULAR DEPOSITS AS WELL AS WITHDRAWALS THE ADDITIO N OF RS. 20,71,669/- (RS. 3,41,150 + 17,30,519) MADE BY THE AO IS NOT JUSTIFIED. ADDITION OF RS. 20,71,669/- MADE BY THE AO IS, THEREFORE/DELETED; FURTHER, SINCE THE APPELLANT HAS DISCLOSED PROFIT OF RS. 2,10,240/- U/S 44AF @ 9.5% GROSS RECEIPTS OF RS .22,08,000/-, ADHOC ESTIMATED ADDITION OF RS.2,00,760/- MADE BY T HE AO ALSO CANNOT BE SUSTAINED. GROUND NOS. 1,2 & 3 ARE ALLOWE D IN FAVOUR OF THE APPELLANT. 5. FROM THE ABOVE PARA OF THE ORDER OF LD. CIT (A), WE FIND THAT A CLEAR FINDING IS GIVEN BY THE LD. CIT (A) THAT TOTAL DEPO SITS IN TWO BANK ACCOUNTS AMOUNTING TO RS.20,87,195/-IS LOWER THAN THE BUSINE SS RECEIPTS OF RS.22.08 LAKH DECLARED BY THE ASSESSEE ON WHICH THE ASSESSEE HAS DECLARED INCOME OF RS.2,10,240/- U/S 44AF OF THE ACT AND THE SAME IS A MOUNTING TO RS.9.5% OF GROSS RECEIPTS FROM BUSINESS AT RS.22.08 LAKH. LD. DR OF THE REVENUE COULD NOT CONTROVERT THIS FINDING OF LD. CIT(A). THE ASSE SSEE WAS HAVING BUSINESS RECEIPTS OF RS.22.08 LAKH ON WHICH THE ASSESSEE HAS DECLARED INCOME OF RS.2,10,240/- WHICH IS 9.5% OF GROSS RECEIPTS AND T HE SAME IS U/S 44AF OF THE ACT. THIS IS ALSO CLEAR THAT THE AMOUNT DEPOSITED I N TWO BANK ACCOUNTS OF 4 RS.20,87,195/- IS LOWER THAN THE AMOUNT OF BUSINESS RECEIPT OF RS.22.08 LAKH AND THEREFORE, IT HAS TO BE ACCEPTED THAT THE EXPLA NATION OF THE ASSESSEE THAT THE AMOUNT WAS DEPOSITED BY THE ASSESSEE IN THE BAN K ACCOUNT OUT OF BUSINESS RECEIPTS DESERVES ACCEPTANCE. THIS FINDING IS ALSO GIVEN BY LD. CIT(A) THAT IN THE BANK STATEMENT, THERE WERE REGULAR DEPO SIT AS WELL AS WITHDRAWALS AND THIS FACT SUPPORTS THE CLAIM OF THE ASSESSEE TH AT DEPOSITS IN BANK ACCOUNT IS OUT OF BUSINESS RECEIPT AND WITHDRAWAL BY THE BA NK ACCOUNT IS USED FOR BUSINESS EXPENSES. UNDER THESE FACTS, WE FIND NO RE ASON TO INTERFERE IN THE ORDER OF THE CIT(A). 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DAT E MENTIONED ON THE CAPTION PAGE) SD/- SD/- (SUNIL KUMAR YADAV) (A.K. G ARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 24/09/2015 AKS COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR