Umesh Kumar Jaiswal, Kushinagar V. Income Tax Officer, Ward - 2(4), Kushinagar

ITA 27/VNS/2021

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 9681 (ITAT-VARANASI)
• Duration Of Justice: 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 31-10-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts; Business income; Condonation of delay; Bonafide mistake; Set aside
• Section: 145(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CIRCUIT ‘SMC’ BENCH, VARANASI BEFORE SHRI.VIJAY PAL RAO, JUDICIAL MEMBER ITA No.27/VNS/2021 Assessment Year: 2017-18 Umesh Kumar Jaiswal, Prop. Ramagya Prasad And Sons, Jataha Road, Padrauna, Kushinagar, Uttar Pradesh PAN-ACDPJ3729Q v. Income Tax Officer, Ward-2(4), Kushinagar (Appellant) (Respondent) Appellant by: Shri. Ashish Bansal, Adv Respondent by: Sh. A.K. Singh, Sr. D.R. Date of hearing: 25.05.2022 Date of pronouncement: 07.06.2022 O R D E R SHRI VIJAY PAL RAO, JUDICIAL MEMBER: This appeal by the assessee is directed against the order dated 26.08.2021 of CIT(A) (National Faceless Appeal Centre, Delhi) for the assessment year 2017-18. 2. There is a delay of seven days in filing the present appeal. The assessee has filed an application for condonation of delay and explained the delay due to bonafide mistake as instead of filing the appeal before the I.T.A.T., Varanasi, the assessee send the appeal to I.T.A.T., Allahabad Bench which was returned back to him and therefore, there is a delay in filing the appeal before the I.T.A.T. Bench at Varanasi. The learned AR of the assessee thus pleaded that a delay of seven days in filing the appeal may be condoned as it was a bonafide mistake and it was not intentional or deliberate. 3. On the other hand, learned DR has opposed the application for condonation of delay. 4. I have considered the rival submissions as well as relevant material on record and gone through the contents of the application for condonation of delay. The cause of delay ITA No.27/VNS/2021 Umesh Kumar Jaiswal 2 explained by the assessee is that due to mistake he tried to submit the appeal in the I.T.A.T. Allahabad Bench instead of before I.T.A.T. Varanasi Bench and therefore, the appeal papers were returned back to him so that it could be filed before I.T.A.T. Varanasi Bench. The facts as explained by the assessee are not in dispute therefore, I am satisfied that assessee was having a sufficient cause for the delay of seven days in filing the present appeal. Accordingly, the delay of seven days in filing the appeal is condoned. 5. The assessee has raised the following grounds:- 1. Because of the CIT(A) has erred in law and on facts in upholding the addition of Rs. 4,07,517/- made by the Ld. Assessing Officer on the basis of turnover of Rs. 18,97,16,297/- as erroneously estimated by him from the overall credit amounts as appearing in bank accounts maintained by the appellant, for the year under consideration. 2. Because the computation of turnover of Rs. 18,97,16,297/- (as against the disclosed turnover of Rs. 16,36,88,219/-) by the Ld. Assessing Officer [as also confirm by the CIT(A)] on the basis of overall credits of bank accounts are wholly erroneous as the said credits included inter-transfer of funds of Rs. 2,17,06,000/- from one bank account to another: Particulars Amount Overall credits in PNB account 0374002101016687 3,02,58,552 Overall credits in PNB account 0374008700009059 8,04,91,477 Total (A) 48,97,16,297 Less: Intra account transfer(from PNB account 9059 to 6687) 2,03,55,000 Intra account transfer(from PNB account 6687 to 9059) 13,51,000 Total (B) 2,17,06,000 Net credit in bank account (A-B) 16,80,10,297 3. Because the credits of Rs. 18,97,16,297/- as appearing in the bank account of the appellant also includes VAT realized on sales of Rs. 51,11,186/- which does not constitute turnover of the appellant for the year under consideration. 4. Because, without prejudice to the aforesaid, the audited books of accounts and other records, in the form of ledgers of bank account, sundry creditors and day book, VAT returns etc. were placed before the Assessing Officer as also relied during the course of appellate proceedings, CIT9A) has grievously erred in law and on facts in upholding the rejection of books of account made by the Assessing Officer under Section 145(1) of the Act. 5. Because there is no as such change in the volume of business the appellant firm which could have been adversely viewed by the Ld. Assessing officer [as also affirmed by the ITA No.27/VNS/2021 Umesh Kumar Jaiswal 3 CIT9A)] so as to variate from the disclosed business income and addition of Rs. 4,07,517/- could have been made/sustained by the authorities below. 6. Because the submissions made by the appellant before the authorities below had not been considered in proper prospective as the submissions so made were duly verifiable from the audited books of account and other information submitted by the appellant during the course of assessment/appellate proceedings, authorities below and completely erred in adding/sustaining Rs. 4,07,517/- income of the appellant. 7. Because the order appealed against is contrary to the facts, law and principles of natural justice.” 6. The solitary issue arises in this appeal of the assessee is regarding an addition of Rs. 04,07,517/- made by the Assessing Officer by considering the deposits in the bank account of the assessee as turnover of the assessee. The learned AR of the assessee has submitted that the assessee produced relevant record before the Assessing Officer as well as CIT(A) in the faceless proceedings but the CIT(A) has not considered the relevant records submitted online by the assessee. He has referred to a paper book filed by the assessee containing 54 pages and submitted that in the submissions made before the CIT(A) during the faceless proceedings, contains all the details of deposits in the bank account and re-conciliation of difference of the turnover of the assessee and the total credit in the bank account. He has submitted that there are inter bank accounts transfers in the three bank accounts of the assessee to the tune of Rs. 2,17,06,000/- which is the difference between the total credit in the bank account and the turnover of the assessee. He has further submitted that the details of the sales of the assessee alongwith the VAT was also submitted before the CIT(A). It is matching with the deposits in the bank account if the contra entries regarding inter transfer of the bank account of the assessee are taken into consideration. Thus the Ld. AR has submitted that an addition made by the Assessing Officer is not justified and the same may be deleted. 7. On the other hand, learned DR has submitted that the assessee has not produced any books of accounts before the Assessing Officer and no record was produced even before the CIT(A) as recorded in the impugned order. Therefore, the Assessing Officer rejected the books of accounts under section 145(3) and applied the undisputed G.P. rate ITA No.27/VNS/2021 Umesh Kumar Jaiswal 4 on the total credits found in the bank accounts of the assessee. He has relied upon the orders of the authorities below. 8. I have considered the rival submissions as well as relevant material on record. The Assessing Officer has made the addition in question by taking into consideration the total sum of the credit side of the three bank accounts of the assessee. From the details of the bank account statement, it is noted that there are various entries of inter bank account transfers which means transfers are made from one bank account of the assessee to another bank account and vice-versa. The Assessing Officer has taken the total deposits and credits in the bank account of the assessee and has not verified these inter bank transfers for want of necessary record. Though the assessee has claimed that he has submitted the relevant details before the CIT(A) in the faceless proceeding however, the CIT(A) has stated in the order as under:- “I have also considered the submission of the appellant. Admittedly the purchase bills, sale bills, vouchers and complete bills were not given before AO and before me only part account in tally of intra transaction, bank statement of PNB & HDFC and premium paid certificate has been given. Therefore the A.O. has correctly rejected the books of accounts of the appellant and applied gross profit rate on undisclosed sales. During the assessment the AO worked out the extra profit @ 1.59% as shown by the appellant on total credit entries of the bank account i.e. Rs. 18,97,16,297/- and calculated extra profit of Rs. 30,16,489/-. Thus, the difference in gross profit came to Rs. 4,07,517/- (3016489-2608972) and the same was added to the total income of the appellant is also correct. Hence, the contention of the appellant the addition of Rs. 4,07,517/- has been made on mere suspicion and surmises which is highly unreasonable and unjustified is not sustainable and liable to be confirmed. In view of the above discussion the addition made by the AO of Rs. 4,07,517/- on the basis of extra profit is hereby confirmed.” 9. As evident from the impugned order of the CIT(A), it has confirmed the order of the Assessing Officer for any details of purchase bills, sales bills and vouchers. The CIT(A) has turned down the details of inter account transactions as reflected from bank account statement of the assessee on the ground that these are not complete records. It appears ITA No.27/VNS/2021 Umesh Kumar Jaiswal 5 that the CIT(A) has even not looked into the details submitted by the assessee as the assessee has not made a compilation of the contra entries with the reference of date of each and every entry. Therefore, in the facts and circumstances of the case, when prima facie there are entries of inter transfers in the three bank1 accounts of the assessee, then the entire credit in the bank accounts cannot be treated as the turnover of the assessee. Hence, in the facts and circumstances of the case and in the interest of justice, the matter is set aside to the record of the Assessing Officer for fresh adjudication of the issue after verification and proper enquiry of inter transfer entries in the three bank accounts of the assessee. Needless to say, the assessee be given an appropriate opportunity of hearing before passing the fresh order. 10. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 07.06.2022. Sd/- [VIJAY PAL RAO] JUDICIAL MEMBER DATED: 07/06/2022 Varanasi/Allahabad Sh Copy forwarded to: 1. Appellant 2. Respondent 3. CIT(A),Varanasi 4. CIT 5. DR By order Sr. P.S.