Shri Amit J. Vakharia., Nipani V. Income Tax Officer, Ward-1, Nipani., Nipani

ITA 264/PAN/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93549 (ITAT-PANAJI)
• Duration Of Justice: 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 08-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 12-08-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B BALA KRISHNA LD
• Keywords: Peak credit

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI N.S. SAINI, HON'BLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 264/PNJ/2014 : (A.Y 2009 - 10) AMIT J. VAKHARIA 1019, DALAL PETH, NIPANI DIST : BELGAUM PAN : AAVPV0992R ( APPELLANT) VS. INCOME TAX OFFICER, WARD - 1, NIPANI (RESPONDENT) ITA NO. 2 93 /PNJ/2014 : (A.Y 2009 - 10) INCOME TAX OFFICER, NIPANI , BELGAUM DIST. (APPELLANT) VS. AMIT J. VAKHARIA 1019, DALAL PETH, NIPANI DIST : BELGAUM PAN : AAVPV0992R ( RESPONDENT) ASSESSEE BY : PRAMOD VAIDYA, ADV. REVENUE BY : B. BALAKRISHNA, LD. DR DATE OF HEARING : 0 8 /07/2015 DATE OF PRONOUNCEMENT : 0 8 /07/2015 O R D E R PER GEORGE MATHAN : 1. ITA NO. 264/PNJ/2014 IS AN APPEAL FILED BY THE ASSESSEE AND ITA NO. 293/PNJ/2014 IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A), BELGAUM IN ITA NO. 449/BGM/2011 - 12 DT. 19.6.2014 FOR THE A.Y 2009 - 10. SHRI PRAMOD VAIDYA, ADVOCATE REPRESENTED ON BEHALF OF THE ASSESSEE AND SHRI B. BALAKRISHNA, LD. DR REPRESENTED ON BEHALF OF THE REVENUE. 2 ITA NOS. 264 & 293/PNJ/2014 (A.Y : 2009 - 10) 2. IT WAS SUBMITTED BY THE LD. AR THAT THE ASSESSEE IS AN INDIVIDUAL WHO HAD FILED HIS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR DISCLOSING SALARY AND INTEREST ON CAPITAL FROM THREE PARTNERSHIP FIRMS. IN THE COURSE OF THE ASSESSMENT IT WAS NOTICED THAT THE ASSESSEE WAS HAVING A BANK ACCOUNT WHEREIN TRANSACTIONS TO AN EXTENT OF RS. 34,51,518/ - WAS NOTICED. IT WAS THE SUBMISSION THAT IT WAS SUBMITTED BEF ORE THE AO THAT THE ASSESSEE HAD STARTED A BUSINESS OF DEALING IN CERAMIC TILES IN PUNE AND THE SAID BANK ACCOUNT RELATED TO THE SAID BUSINESS OF PURCHASE AND SALE OF CERAMIC TILES. IT WAS THE SUBMISSION THAT THE AO DID NOT ACCEPT THE CONTENTIONS OF THE A SSESSEE AND HAD TREATED THE TOTAL DEPOSITS IN THE BANK ACCOUNT TOTALLING TO RS. 33,95,900/ - AS THE UNDISCLOSED INCOME OF THE ASSESSEE. IT WAS THE SUBMISSION THAT ON APPEAL , THE LD. CIT(A) HAD HELD THAT THE ASSESSEE WAS DOING BUSINESS OF DEALING IN CERAMIC TILES AT PUNE AND CONSEQUENTLY HELD THAT THE INCOME OF THE ASSESSEE WAS LIABLE TO BE ASSESSED AT 10% OF THE TOTAL TURNOVER OF RS. 34,51,518/ - . IT WAS THE FURTHER SUBMISSION THAT THE LD. CIT(A) HAD FURTHER ENHANCED THE ASSESSMENT BY HOLDING THAT THE CAPITAL REQUIRED FOR CLAIMING TURNOVER OF RS. 34,51,518/ - WAS TO AN EXTENT OF RS. 12 LACS AND FURTHER ADDED AN AMOUNT OF RS. 2 LACS REPRESENTING THE SECURITY DEPOSIT IN RESPECT OF THE GODOWN AT PUNE. IT WAS THE SUBMISSI ON THAT THIS IS THE ASSESSEES FIRST YEAR OF BUSINESS IN DEALING IN TILES AND THE TURNOVER OF THE ASSESSEE IS BELOW RS. 40 LACS AND AS THE ASSESSEE WAS NOT MAINTAINING ANY BOOKS OF ACCOUNTS, THE PROVISIONS OF SEC. 44AF WAS LIABLE TO BE APPLIED AND THE INCO ME OF THE ASSESSEE ESTIMATED AT 5% AS PER THE PROVISIONS OF SEC. 44AF. IT WAS THE FURTHER SUBMISSION THAT THE ADDITION OF RS. 12 LACS REPRESENTING THE CAPITAL WAS FAR EXCESSIVE AND WAS LIABLE TO BE REDUCED SUBSTANTIALLY. IT WAS THE SUBMISSION THAT THE AS SESSEE WAS DEALING O N CREDIT AND THIS WAS ALSO CONFIRMED BY THE VARIOUS CORRESPONDENCES WITH THE SUPPLIERS. IT WAS THE FURTHER SUBMISSION THAT THE ASSESSEE HAD NOT PAID ANY DEPOSIT OF RS. 2 LACS FOR THE GODOWN/SHOP AT PUNE AND CONSEQUENTLY, THE SAID ADDIT ION WAS NOT LIABLE TO BE SUSTAINED. 3 ITA NOS. 264 & 293/PNJ/2014 (A.Y : 2009 - 10) 3. IN REPLY, THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AO. IT WAS THE FURTHER SUBMISSION THAT IN THE REVENUES APPEAL, THE REVENUE HAS CHALLENGED THE ACTION OF THE LD. CIT(A) IN ACCEPTING THAT THE ASSESSEE WAS D OING BUSINESS OF DEALING IN CERAMIC TILES. IT WAS THE SUBMISSION THAT THERE WAS NO EVIDENCE TO PROVE THAT THE ASSESSEE WAS DOING ANY BUSINESS IN CERAMIC TILES. IT WAS THE SUBMISSION THAT THE TOTAL DEPOSIT IN THE BANK ACCOUNT OF THE ASSESSEE WAS LIABLE TO BE TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERUSAL OF THE ORDER OF THE LD. CIT(A) CLEARLY SHOWS THAT THE ASSESSEE HAS PRODUCED THE LICENCE ISSUED UNDER THE SHOPS & ESTABLISHMENT ACT IN RESPECT OF T HE CERAMIC TILES BUSINESS AT PUNE. THE ASSESSEE HAS ALSO PRODUCED THE LEASE AGREEMENT IN RESPECT OF THE LEASING OF THE PREMISES AT PUNE. FURTHER, THE ASSESSEE HAS ALSO PRODUCED THE CONFIRMATION LETTERS FROM THE SUPPLIERS, AS ALSO FROM THE CUSTOMERS. A P ERUSAL OF THE BANK ACCOUNT ALSO CLEARLY SHOWS THAT THE TRANSACTIONS THEREIN SHOW PAYMENTS BY CHEQUES TO VARIOUS DEALERS IN CERAMIC TILES WHO HAVE ALSO FILED CONFIRMATION LETTERS. IN THESE CIRCUMSTANCES, IT HAS TO BE ACCEPTED THAT THE ASSESSEE IS DOING BUS INESS OF DEALING IN CERAMIC TILES. CONSEQUENTLY, THE FINDING OF THE LD. CIT(A) HOLDING THAT THE ASSESSEE IS DOING BUSINESS OF DEALING IN CERAMIC TILES STANDS UPHELD. 5. A PERUSAL OF THE BANK ACCOUNT OF THE ASSESSEE SHOWS THAT THE ACCOUNT HAS BEEN OPENED ON 2.6.2008 RELEVANT TO THE A.Y 2009 - 10. THE TOTAL TRANSACTION IN THE SAID BANK ACCOUNT COMES TO RS. 33,95,900/ - AS HAS BEEN MENTIONED BY THE AO. HOWEVER, THE TURNOVER HAS BEEN ADOPTED BY THE LD. CIT(A) AT RS.34,51,518/ - WHICH HAS NOT BEEN DISPROVED OR D ISPUTED BY THE ASSESSEE. CONSEQUENTLY, THE TURNOVER OF THE ASSESSEE IS TAKEN AT RS. 34,51,518/ - IN RESPECT OF THE SAID CERAMIC TILE BUSINESS. AS THE SAID TURNOVER IS BELOW RS. 40 LACS, AND 4 ITA NOS. 264 & 293/PNJ/2014 (A.Y : 2009 - 10) AS THE ASSESSEE IS NOT MAINTAINING BOOKS OF ACCOUNTS THE PROVISIO NS OF SEC. 44AF WOULD AUTOMATICALLY APPLY AND AS PER THE SAID PROVISIONS, THE INCOME OF THE ASSESSEE IS DIRECTED TO BE TAKEN AT 5% AS PRESCRIBED UNDER THE ACT. 6. COMING TO THE ENHANCEMENT WHICH HAS BEEN MADE BY THE LD. CIT(A) IN RESPECT OF THE ADDITION REPRESENTING THE DEPOSIT FOR THE GODOWN, A PERUSAL OF THE AGREEMENT SHOWS THAT THERE IS NO DEPOSIT MENTIONED IN THE SAID AGREEMENT. HOWEVER, NO PERSON WOULD NORMALLY RENT OUT HIS PREMISES WITHOUT TAKING DEPOSIT. THEREFORE, IT IS PRESUMED THAT THE ASSESS EE HAS PAID DEPOSIT OF RS. 2 LACS REPRESENTING 10 MONTHS RENTAL DEPOSIT. CONSEQUENTLY, THE ADDITION OF RS. 2 LACS AS MADE BY THE LD. CIT(A) STANDS CONFIRMED. 7. IN RESPECT OF ADDITION OF RS. 12 LACS REPRESENTING THE CAPITAL, IT IS NOTICED THAT THE ASSESSEE HAS PRODUCED EVIDENCE TO SHOW THAT THE ASSESSEE IS DOING THE BUSINESS ON CREDIT. HOWEVER, TAKING INTO CONSIDERATION THE FACT THAT EVEN WHILE DOING A BUSINESS ON CREDIT, CERTAIN AMOUNT OF CAPITAL WOULD BE REQUIRED, THE PEAK CREDIT IN THE BANK ACCO UNT IS DIRECTED TO BE ADDED. THE PEAK CREDIT IS FOUND TO BE AN AMOUNT OF RS. 3,01,079/ - AS ON 16.7.2008. THIS AMOUNT OF PEAK CREDIT IS DIRECTED TO BE ADDED IN THE PLACE OF RS. 12 LACS AS MADE BY THE LD. CIT(A). 8. IN THE RESULT, THE APPEAL OF THE ASSE SSEE IS PARTLY ALLOWED AND THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08/07/2015. S D / - (N.S. SAINI) ACCOUNTANT MEMBER S D / - ( GEORGE MATHAN ) JUDICIAL MEMBER PLACE : PANAJI / GOA DATED : 0 8 /07/ 201 5 *SSL* 5 ITA NOS. 264 & 293/PNJ/2014 (A.Y : 2009 - 10) COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT(A) CONCERNED (4) CIT CONCERNED (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER , 6 ITA NOS. 264 & 293/PNJ/2014 (A.Y : 2009 - 10) DATE INITIAL ORIGINAL DICTATION PAD & DRAFT ORDER ARE ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 0 8 /07/2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 0 8 /07/2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 0 9 /07/2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 0 9 /07/2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 0 9 /07/2015 SR.PS 6. DATE OF PRONOUNCEMENT 0 8 /07/2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 0 9 /07/2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER