THE ITO, 3(1), Indore V. M/S. SAI ENTERPRISES, Indore

ITA 281/IND/2014

• Counselvise Citation: 28122714 RSA 2014
• Duration Of Justice: 1 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-12-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 21-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Keywords: Unexplained cash credit
• Section: 44AD

Judgement Text

ITO VS. M/S SAI ENTERPRISES ITA 281/IND/2014 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER AND SHRI B.C. MEENA, HONBLE ACCOUNTANT MEMBER ITA NO. 281/IND/2014 A.Y. 2005-06 INCOME TAX OFFICER 3(1) INDORE ::: APPELLANT VS M/S SAI ENTERPRISES INDORE ::: RESPONDENT APPELLANT BY SHRI R.A. VERMA RESPONDENT BY NONE DATE OF HEARING 6.10.2015 DATE OF PRONOUNCEMENT 1 .1 2 .2015 O R D E R PER SHRI B.C. MEENA, AM THIS APPEAL FILED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LEARNED CIT(A)-I, INDORE, DATED 22.1 .2014. ITO VS. M/S SAI ENTERPRISES ITA 281/IND/2014 2 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PURCHASE OF LAND AND CONSTRUCTION OF FLATS THEREON AND SALE THEREOF. THE ASSESSEE PURCHASED LAND, CONSTRUCTED MULTI-STOREYED BUILDING AND DEBITED CONSTRUCTION EXPENSES IN TRADING ACCOUNT AT RS.16,71,194/-. THE ASSESSEE FIRM HAS SHOWN RECEIPT OF SALES COMPLETED AT RS.6,75,000/- AND WORK I N PROGRESS AT RS.40,83,226/-. THE ASSESSEE HAS SHOWN SALE OF THREE FLATS FOR RS.17,57,500/-. DURING THE YEAR T HE ASSESSEE HAS SHOWN GROSS RECEIPTS OF RS.16,65,000/- AN D BY APPLYING THE PROVISIONS OF SECTION 44AD OF THE AC T, WORKED OUT NET PROFIT ATRS.1,33,400/-. THE ASSESSING OFFICER MADE THE ADDITION OF RS.10,42,500/- AS INCOME FROM UNDISCLOSED SALES WHICH IS THE DIFFERENCE BETWE EN RS.17,57,500 6,75,000). THE LEARNED CIT(A) DELETE D THE ADDITION AGAINST WHICH THE REVENUE IS IN APPEAL BEFORE T HE TRIBUNAL. ITO VS. M/S SAI ENTERPRISES ITA 281/IND/2014 3 3. BEFORE US, THE LEARNED DR FAILED TO CONTRADICT THE FINDINGS OF THE LEARNED CIT(A) THAT THE ASSESSEE IS EN GAGED IN CIVIL CONSTRUCTION WORK AND IT IS COVERED BY THE PROVISIONS OF SECTION 44AD OF THE ACT. WE, THEREFO RE, FIND NO MERIT IN THE FIRST GROUND OF APPEAL AND DISMISS TH E SAME. 4. IN GROUND NO. 2 THE ISSUE RAISED IS DELETION OF AD DITION OF RS1,52,287/- BY THE LEARNED CIT(A). 5. WE HAVE HEARD BOTH THE SIDES. IN PARA 8 THE LEARNED CIT(A) HAS OBSERVED AS UNDER :- 8. THE FORTH ADDITION OF RS.1,52,287/- IS THE BANK BALANCE APPEARING IN BALANCE SHEET OF APPELLANT AND SAME WAS ADDED BY THE ASSESSING OFFICER ON THE GROUND THAT ON BANK VERIFICATION NO ACCOUNT WAS FOU ND IN NAME OF M/S SAI ENTERPRISES. THE APPELLANT EXPLAINED THAT THERE WAS A CHANGE IN PARTNERSHIP AN D ITO VS. M/S SAI ENTERPRISES ITA 281/IND/2014 4 OWNERSHIP OVER THE FIRM.MAIN PARTNER FROM THE SIDE OF NEW OWNERS NAMELY SH. DARPAN JETHWANI WAS ALREADY HOLDING A CURRENT A/C IN THE BANK THROUGH WHICH ALL THE TRANSACTIONS OF APPELLANT FIRM WERE CARRIED OUT. SA ME FACTS WERE PLACED BEFORE A.O. AND HE HAS NOT CONTRADICTED THE SAME. IN VIEW OF THESE FACTS THE ADDITION OFRS.1,52,287/- IS HEREBY DELETED. 6. AFTER HEARING BOTH THE SIDES, WE HOLD THAT THE REV ENUE HAS FAILED TO CONTROVERT THE FINDINGS OF THE LEARNED CIT(A) THAT THERE WAS CHANGE IN PARTNERSHIP AND OWNERSHIP OF TH E FIRM. THE MAIN PARTNER FROM THE SIDE OF NEW PARTNERS , NAMELY, DARPAN JETHWANI WAS HOLDING A CURRENT ACCOUNT IN THE BANK THROUGH WHICH ALL THE TRANSACTIONS WERE CARRIED . THE LEARNED DR HAS FAILED TO CONTRADICT THIS FINDING OF THE LEARNED CIT(A). WE, THEREFORE, DISMISS THIS GROUND O F THE REVENUE. ITO VS. M/S SAI ENTERPRISES ITA 281/IND/2014 5 7. GROUND NO. 3 IS AGAINST DELETION OF ADDITION OFNRS.8,61,748/- ON ACCOUNT OF UNEXPLAINED CREDIT IN THE PARTNERS CAPITAL ACCOUNT. 8. THE ASSESSEE CLAIMS THAT IT WAS MERELY A TRANSFER ENTRY, AS PER THE REVENUE THE ASSESSEE COULD NOT ADD UCE ANY EVIDENCE IN THIS REGARD BEFORE THE ASSESSING OFFI CER. THE LEARNED CIT(A) GRANTED RELIEF TO THE ASSESSEE. 9. AFTER HEARING THE REVENUE, WE FIND THAT THE ASSESSE E HAS SIMPLY STATED THAT IT WAS A TRANSFER ENTRY OF RS. 8 L ACS FROM STATE BANK OF INDORE TO DENA BANK AND THERE WAS OPENING BALANCE OF RS.15,248/- BUT THERE IS NO DOCUME NT IN SUPPORT OF THIS. WE, THEREFORE, FIND THAT THE LE ARNED CIT(A) HAS NOT VERIFIED THE FACT REGARDING THE CLAIM O F THE ASSESSEE THAT IT WAS A MERE TRANSFER FROM ONE ACCOUNT TO ANOTHER. IN OUR VIEW, THIS ISSUE REQUIRES VERIFICATION FROM DOCUMENTS PRIOR TO FINALISATION. THEREFORE, IN THE IN TEREST OF ITO VS. M/S SAI ENTERPRISES ITA 281/IND/2014 6 JUSTICE, WE REMAND THIS ISSUE TO THE FILE OF THE ASS ESSING OFFICER FOR DECIDING THE SAME DE NOVO. ASSESSEE SHALL SUBMIT NECESSARY DETAILS INCLUDING BANK STATEMENTS OF BOTH ACCOUNTS. 10. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED FOR STAT ISTICAL PURPOSES. PRONOUNCED IN OPEN COURT ON IST DECEMBER, 2015 SD/- SD/- (D.T. GARASIA) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER IST DECEMBER, 2015 DN/-