The ITO, Ward-9(1), Ahmedabad V. Shri Valjibhai Hansraj Patel,HUF, Ahmedabad

ITA 2609/AHD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60369 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 16-05-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 20-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV SRDR
• Keywords: Unexplained cash credit
• Section: 44AD

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI, A.K.GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ITA NO.2609/AHD/2011 & CO NO.02/AHD/2012 (ARISING OUT ITA NO.2609/AHD/2011) ASSESSMENT YEAR: 2008-09 INCOME TAX OFFICER, WARD-9(1) AHMEDABAD SHRI VALJIBHAI H PATEL, HUF, 93, RUDRAX COMPLEX, NR. RUDRAX WAY BRIDGE, MEMDABAD ROAD, VATVA, AHMEDABAD-382445 PAN NO.AADHP6246G V/S . V/S . VALJIBHAI H PATEL, HUF 93, RUDRAX COMPLEX, NR. RUDRAX WAY BRIDGE, MEHMDAVAD ROAD, VATVA, AHMEDABAD 382445 INCOME TAX OFFICER, WARD-9(1), AHMEDABAD (APPELLANT) .. (RESPONDENT) /BY ASSESSEE NONE (WRITTEN SUBMISSION) /BY REVENUE SHRI B.L. YADAV, SR-DR /DATE OF HEARING 16-05-2012 /DATE OF PRONOUNCEMENT 24-05-2012 O R D E R PER KUL BHARAT, JUDICIAL MEMBER:- THE REVENUE HAS FILED PRESENT APPEAL AND THE ASSES SEE HAS FILED CROSS OBJECTION (CO) BOTH ARE DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XV, AHMEDABAD DATED 29-08-2011 FOR THE ASSESSMENT YEAR 2008-09. THE NOTICE OF HEARING WAS SERVED UPON THE ASSESSEE THROUGH ITA NO.2609/AHD/2011 & CO 02/AHD/12 A.Y. 2008-09 ITO WD-9(1) ABD V. VALJIBHAI H PATEL HUF PAGE 2 REGISTERED POST WITH ACKNOWLEDGEMENT DUE (RPAD FOR SHORT) ON 18-04-2012. HOWEVER, ON THE DATE OF HEARING NONE APPEARED ON BE HALF OF THE ASSESSEE BUT THE WRITTEN SUBMISSION IS ON THE RECORD. THEREFORE, WE TAKE UP APPEAL AND CO FOR HEARING IN THE ABSENCE OF ASSESSEE. FIRST WE TAKE UP REVENUES APPEAL IN ITA NO.2609/AH D/2011. 2. THE REVENUE HAS RAISED SINGLE EFFECTIVE GROUND O F APPEAL, WHICH READS AS UNDER:- 1) THE LD. COMMISSIONER OF INCOME-TAX(A)-XV, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.22,74,4 23/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT AND UNEXPLAINED INTRODUCTIO N IN CAPITAL DURING THE YEAR US. 68 OF THE I.T. ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME WAS FIELD BY THE ASSESSEE ON 03-02-2009, DECLARING TOTAL INCOME OF R S.2,22,478/-. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY UN DER CASS AND A NOTICE U/S. 143(2) OF THE INCOME-TAX ACT, 1961 (HEREINAFTE R REFERRED TO AS THE ACT) WAS ISSUED AND SERVED UPON ASSESSEE. IT IS RECORDE D BY ASSESSING OFFICER THAT THE CASE WAS FIXED FOR HEARING ON 15-04-2010 N ONE ATTENDED THE PROCEEDINGS. THEREAFTER A NOTICE WAS ISSUED ON 25-1 1-2010 REQUESTING THE ASSESSEE TO FURNISH DETAILS ON 29-11-2010 BUT IT IS RECORDED BY THE ASSESSING OFFICER NEITHER THE ASSESSEE ATTENDED NOR FURNISHED ANY DETAILS AS CALLED FOR. THEREFORE, HE PROCEEDED TO FINALIZE THE ASSESSMENT PROCEEDINGS EX PARTE U/S. 144 OF THE ACT ON THE BASIS OF MATERIAL AVAILABLE O N RECORD. THUS, THE ASSESSMENT ORDER DATED 16-12-2010 U/S. 144 OF THE A CT WAS PASSED. THE ASSESSING OFFICER MADE ADDITION OF RS.29,90,142/- B EING THE FRESH CAPITAL INTRODUCED AND AN ADDITION OF RS.48,90,823/- ON ACC OUNT OF UNSECURED LOAN AND BOTH THESE ADDITIONS WERE MADE U/S. 68 OF THE A CT. THE ASSESSEE FEELING AGGRIEVED BY THE ASSESSMENT ORDER FILED AN APPEAL B EFORE LD. CIT(A). 4. THE ASSESSEE MADE SUBMISSION DATED 30-05-2011 BE FORE LD. CIT(A) , WHEREIN IT WAS STATED THAT ASSESSEE DID NOT MAINTAI N REGULAR BOOKS OF ACCOUNT DURING THE YEAR UNDER CONSIDERATION AND FOR THE LIM ITED PURPOSE OF FILING RETURN ITA NO.2609/AHD/2011 & CO 02/AHD/12 A.Y. 2008-09 ITO WD-9(1) ABD V. VALJIBHAI H PATEL HUF PAGE 3 PROFIT AND LOSS ACCOUNT AND BALANCE-SHEET WERE COMP ILED AND FILED. IT WAS ALSO STATED THAT FROM THE COMPILED CAPITAL ACCOUNT, IT C AN BE SEEN THAT THE OPENING BALANCE IN THE CAPITAL ACCOUNT IS RS.27,15,719/- AS ON 01-04-2007. THEREFORE, SECTION 68 OF THE ACT WAS NOT APPLICABLE TO THE CAP ITAL. AFTER CONSIDERING THE SUBMISSION OF ASSESSEE LD. CIT(A) ESTIMATED RS.20 L AKH AS PROFIT EARNED FOR 8 YEARS AND REDUCED THE SAME FROM THE CAPITAL OF RS.2 7,15,719/- AND TREATED RS.7,15,719/- AS UNEXPLAINED AMOUNT ADDITION OF WHI CH WAS UPHELD U/S. 68 OF THE ACT. BY LD. CIT(A). FURTHER, LD. CIT(A) DELETDE D THE ADDITION OF RS.48,90,822/- QUA THE UNSECURED LOPAN ON THE BASIS OF REMAND REPORT OF THE ASSESSING OFFICER. THE REVENUE FEELING AGGRIEVED BY THE ORDER OF LD. CIT(A) HAS FILED APPEAL AND ASSESSEE CAME IN CO FOR CONFIR MING THE ADDITION OF RS.7,15,719/-. 5. NOW, REVENUE IS IN APPEAL BEFORE US. LD.SR-DR SU PPORTED THE ORDER OF ASSESSING OFFICER AND SUBMITTED THAT ORDER PASSED B Y LD. CIT(A) IS ERRONEOUS. 6. WE HAVE HEARD THE LD. DR, PERUSED THE MATERIALS AVAILABLE ON RECORD AND WRITTEN SUBMISSION FILED ON THE RECORD BY THE A SSESSEE, SAME ARE REPRODUCED AS UNDER:- 1. REGARDING APPEAL FIELD BY THE DEPARTMENT FOR DE LETION OF ADDITIONS OF RS.22,74,423/- ON ACCOUNT OF ALLEGED UNEXPLAINED CA SH CREDIT. IN THIS CONNECTION, I BEG TO STATE THAT THE LEARNED A.O HAS SUBMITTED IN REMAND REPORT AS MENTIONED IN PARA 2,5 & 6 OF APPELLATE ORDER AND CONSIDERING THE SAME THE LEARNED CIT(A) HAS DELETED THE ADDITIONS AND AS SUC H APPEAL FILED BY THE DEPARTMENT BE DISMISSED ON THIS GROUND. 2. THAT APPELLANT IS FILING RETURN OF INCOME U/S 44 AD SINCE LAST SO MAN YEARS. IN REMAND REPORT DATED 5.7.11 ON PAGE 2 THE LEARNED A.O HAS CONSIDERED 10 YEARS RETURN OF INCOME. HOWEVER, BOTH THE AUTHORITI ES HAVE CONSIDERED ONLY 9 YEARS. FURTHER THE APPELLANT IS ASSESSED SINCE LAST SO MANY YEARS AND FILING HIS RETURN OF INCOME U/S. 44AD. THE OPENING CAPITAL BALANCE SHOWN BY THE APPELLANT IS TOTALLY ACCEPTABLE CONSIDERING THE LEN GTH OF PERIOD FROM WHICH THE APPELLANT IS DOING BUSINESS AND FILING RETURN OF IN COME. 3. IT IS CLEARLY MENTIONED THAT THE ASSESSEE IS DOI NG BUSINESS SINCE MORE THAN 12 YEARS AND FILING RETURN OF INCOME WHICH PROVES B EYOND DOUBT THAT CAPITAL BALANCE OF APPELLANT IS FULLY JUSTIFIED. THE LEARNE D A.O IS HAVING RECORD OF THE APPELLANT, HOWEVER, IN REMAND REPORT HE HAS NOT COV ERED 3 YEARS AND ITA NO.2609/AHD/2011 & CO 02/AHD/12 A.Y. 2008-09 ITO WD-9(1) ABD V. VALJIBHAI H PATEL HUF PAGE 4 CONSIDERING THIS ASPECT ALSO THE ADDITION RETAINED BY LEARNED CIT(A) AMOUNTING TO RS.7,15,719/- MENTIONED IN PARA 6 REQU IRES TO BE DELETED IN THE INTEREST OF JUSTICE AND FAIR PLAY. 4. THE APPELLANT IS A SMALL ASSESSEE DOING LABOUR C ONTRACT WORK AND PERSONALLY DOING LABOUR WORK, AND UNKNOWN WITH THE PROVISIONS OF THE INCOME- TAX ACT AND THEREFORE CONSIDERING ALL THE CIRCUMSTA NCES, THE ADDITIONS OF RS.7,15,719/- RETAINED BY LEARNED CIT(A) BE DELETED . 5. THE APPELLANT IS FILING THIS WRITTEN SUBMISSIONS WHICH MAY KINDLY BE CONSIDERED AND JUSTICE BE DONE TO THE APPELLANT AND OBLIGE. WE FIND THAT THE REVENUE HAS NOT GIVEN ANY BREAK UP OF THE AMOUNT OF RS.22,74,423/- AS HOW THE SAME AMOUNT IS ARRIVED AT ON ACCOUNT OF UNEXPLAINED CASH CREDIT AND UNEXPLAINED INTRODUCTIO N IN CAPITAL DURING THE YEAR U/S 68 OF THE ACT. HOWEVER, WE FIND THAT LD. C IT(A) IN PARA-4 AND 5 OF HIS ORDER HAS OBSERVED AS UNDER:- 4. GROUND NO.3 IS WITH RESPECT TO ADDITION OF RS.209,90,142 AS SI NCE FROM UNDISCLOSED SOURCE IN RESPECT OF CAPITAL. THE ADDIT ION HAS BEEN MADE AS PER PARA 5 OF THE ASSESSMENT ORDER. DURING THE COURSE O F APPELLATE PROCEEDINGS VIDE SUBMISSION DATED 30.5.2011 IT WAS STATED THAT THE APPELLANT HAS NOT MAINTAINED REGULAR BOOKS OF ACCOUNTS DURING THE YEA R UNDER CONSIDERATION, THAT FOR THE LIMITED PURPOSE OF FILING OF RETURN PR OFIT & LOSS ACCOUNT AND BALANCE SHEET WERE COMPILED AND FILED. IT WAS ALSO STATED T HAT FROM THE COMPILED ACCOUNT (CAPITAL ACCOUNT) IT CAN BE SEEN THAT THE O PENING BALANCE IN THE CAPITAL ACCOUNT IS RS.27,719 AS ON 1.4.2007, THEREF ORE SECTION 68 WAS PLEADED NOT TO BE APPLICABLE TO THE CAPITAL. THE SUBMISSION OF THE APPELLANT AND ALSO THE LEDGER ACCOUNT COPY OF THE CAPITAL ACCOUNT FURNISHED THROUGH PAGE NUMBER 7 OF THE PAPER BOOK (ENCLOSE AS ANNEXURE-1 OF THIS ORDER) WERE SENT TO THE AO FOR REMAND REPO RT. 5. VIDE LETTER DATED 5.7.2011 (REMAND REPORT ENCLOS ED AS AANNEXUIRE-2 OF THIS ORDER) THE AO IN HIS REPORT INFORMED THAT HE A SKED THE APPELLANT TO FILE NECESSARY PROOFS, CASH FLOW STATEMENT, BANK ACCOUN T, CONFIRMATION ETC. IN SUPPORT OF THE OPENING CAPITAL SHOWN. BUT THE APPEL LANT DID NOT FURNISH ANY DETAIL TO THE ASSESSING OFFICER, THEREFORE THE AO P REPARED A TABLE OF THE INCOME DECLARED IN THE RETURNS OF LAST 10- YEARS AN D FOUND THAT AS PER INCOME DECLARED EACH YEAR THEN TOO THE CREDIT BALANCE IN T HE CAPITAL ACCOUNT COULD NOT HAVE BEEN MORE THAN RS.20,51,888. THE TABLE GIVEN IN THE REMAND REPORT IS REPRODUCED BELOW: A.Y. INCOME DECLARED AS PER INCOME TAX RETURN RS. 2000-01 206198 2001-02 161547 2002-03 218154 2003-04 201849 2004-05 289209 ITA NO.2609/AHD/2011 & CO 02/AHD/12 A.Y. 2008-09 ITO WD-9(1) ABD V. VALJIBHAI H PATEL HUF PAGE 5 2005-06 237583 2006-07 182991 2007-08 331877 2008-09 222480 TOTAL 205188 FURTHER THE AO STATED THAT IF AVERAGE HOUSEHOLD EXP ENDITURE IS ESTIMATED AT RS.50,000 PER YEAR THEN FOR 10 YEARS THE EXPENDITUR E COMES TO RS.5,00,000 AND IF THIS IS REDUCED FROM THE CAPITAL OF RS.20,51 ,888, THEN CAPITAL COMES TO RS.15,51,888. ACCORDING TO THE AO CONSIDERING THE 1 0 YEARS RETURN OF INCOME AND THE HOUSEHOLD EXPENSES THE OPENING BALANCE OF R S.27,15,719 REMAINS UNEXPLAINED. IT IS TRANSPIRED FROM THE RECORD THAT LD. CIT(A) ON THE BASIS OF THE REMAND REPORT SUBMITTED BY ASSESSING OFFICER HAS DELETED T HE ADDITION OF RS.48,19,823/- IN RESPECT OF UNSECURED LOAN. IN VIE W OF THE FACT THAT THE DELETION IS MADE AFTER CONSIDERING THE REMAND REPOR T HENCE, NO INTERFERENCE IS CALLED FOR IN THE ORDER OF LD. CIT(A). EVEN OTHERWI SE, THE AO HIMSELF HAS ADMITTED INCOME OF RS.20,51,888/-. IN VIEW OF THIS MATTER, WE DO NOT FIND ANY INFIRMITY INTO THE ORDER PASSED BY LD. CIT(A). THER EFORE, THIS GROUND OF REVENUES APPEAL IS DISMISSED. 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED. COMING TO ASSESSEES CO NO.02/AHD/2012. 8. THE GROUNDS TAKEN IN CO REPRODUCED AS UNDER:- 1. THAT THE LEARNED A.O HAS FIELD APPEAL AGAINST T HE ORDER OF THE LEARNED CIT(A) FOR DELETING RS.22,74,423/- INSTEAD OF RS.20,00,000/- HOLDING IT AS UNEXPLAINED CASH CREDIT AND UNEXPLAIN ED INTRODUCTION OF CAPITAL DURING THE YEAR UNDER SECTION 68 OF THE I.T .ACT. 1961. 2. ON THE PECULIAR FACTS AND CIRCUMSTANCES OF THE C ASE OF THE APPELLANT, THE LEARNED CIT(A) IS UNJUSTIFIED IN RETAINING RS.7 ,15,719/- OUT OF TOTAL ADDITIONS OF RS.27,15,719/- FROM OPENING CAPITAL BA LANCE. 3. THAT THE APPELLANT IS FILING ITS RETURN OF INCOM E U/S 44AD SINCE YEARS TOGETHER AND CONSIDERING THE INCOME DECLARED, THE O PENING CAPITAL BALANCE SHOWN AT RS.27,15,719/- IS WHOLLY JUSTIFIED AND PART AMOUNT OF RS.7,15,719/- CONFIRMED BY LEARNED CIT(A) BE DELETE D. 4. CONSIDERING THE REMAND REPORT FILED BY LEARNED A .O THE TOTAL ADDITIONS OF RS.27,15,719/- MADE BY LEARNED A.O AND RETAINED BY LEARNED CIT(A) OF RS.7,15,719/- BOTH DESERVES TO BE DELETED. ITA NO.2609/AHD/2011 & CO 02/AHD/12 A.Y. 2008-09 ITO WD-9(1) ABD V. VALJIBHAI H PATEL HUF PAGE 6 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E OF THE APPELLANT, THE APPEAL FILED BY THE DEPARTMENT BE DISMISSED AND CROSS OBJECTIONS FILED BY THE APPELLANT BE ALLOWED. 9. FROM THE ABOVE, IT IS CONSIDERED THAT ONLY EFFEC TIVE GROUND IN THE CO IS WITH REGARD TO CONFIRMATION OF ADDITION OF RS.7,15, 719/-. 10. IN WRITTEN SUBMISSION, THE ASSESSEE HAS STATED THAT ASSESSEE HAS BEEN DOING BUSINESS FOR MORE THAN 12 YEARS. THEREFORE CA PITAL BALANCE IS FULLY JUSTIFIED. IT IS SUBMITTED THAT ASSESSING OFFICER H AS NOT COVERED THREE YEARS. THEREFORE, THE ADDITION OF RS.7,15,719/- IS NOT JUS TIFIED. THE ASSESSING OFFICER IN HIS REMAND REPORT HAS STATED THAT THE HOUSEHOLD EXPENDITURE IS ESTIMATED AT RS.50,000/- PER ANNUM, THEN FOR THE 10 YEARS THE EX PENDITURE WOULD BE AT RS.5 LAKH. WE FIND THAT IN THE CURRENT YEAR, THE AS SESSEE HAS MADE PAYMENT TOWARDS LIC AND ALSO PF ACCOUNT. ADMITTEDLY, THIS A MOUNT IS OUTGOING FROM THE CAPITAL ACCOUNT AND SAME WOULD HAVE BEEN IN THE EARLIER YEARS ALSO. MOREOVER, THE ASSESSEE HAS NOT GIVEN ANY DETAILS OF THE HOUSEHOLD EXPENDITURE. HOWEVER, IT CANNOT BE PRESUMED THAT AS SESSEE WAS NOT INCURRING ANY HOUSEHOLD EXPENSES. IN VIEW OF THIS MATTER, WE DO NOT FIND ANY INFIRMITY INTO THE ORDER OF LD. CIT(A). THEREFORE CO OF THE ASSESSEE IS DISMISSED. 11. IN THE RESULT, ASSESSEES CO IS DISMISSED. 12. IN COMBINE RESULT, APPEAL OF REVENUE AND THAT OF AS SESSEES CO ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE. SD/- SD/- (A.K.GARODIA) (KUL BHARAT) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, *DKP - 24/05/2012 '#$ % & ITA NO.2609/AHD/2011 & CO 02/AHD/12 A.Y. 2008-09 ITO WD-9(1) ABD V. VALJIBHAI H PATEL HUF PAGE 7 ' ' ' ' ())*+, ())*+, ())*+, ())*+, '-+ '-+ '-+ '-+ / COPY OF ORDER FORWARDED TO:- 1. ',/* 01 / APPELLANT 2. (2301 / RESPONDENT 3. %)5 3 36 / CONCERNED CIT 4. 3 36- ',/* / CIT (A) 5. +7 8/3 ()))5, 3 ',/*/3 ')5, '#$ % / DR, ITAT, AHMEDABAD 6. 8 ;< = >* / GUARD FILE. BY ORDER/ ' , /TRUE COPY/ ?,/# 3 , / 3 ',/*/3 ')5, '#$ % & STRENGTHEN PREPARATION & DELIVERY O F ORDERS IN THE ITAT 1) DATE OF TAKING DICTATION 16/05 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE NO 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 17/05 4) DATE OF CORRECTION 17/05 5) DATE OF FURTHER CORRECTION 18/05 6) DATE OF INITIAL SIGN BY MEMBERS 21/05 7) ORDER UPLOADED ON 24/05 8) ORIGINAL DICTATION PAD-PART HAS BEEN PLACED IN T HE FILE YES 8) FINAL ORDER AND 2 ND COPY SEND TO BENCH CLERK ON 24/05