Sh. Jugal Kishore Dogra, Ludhiana V. ITO, Ludhiana

ITA 286/CHANDI/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9991 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 31-03-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K MITTALDR
• Keywords: Presumptive income; Business expenditure
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO. 286/CHD/2016 ASSESSMENT YEAR : 2007-08 SHRI JUGAL KISHORE DOGRA, VS THE ITO, B-34/6911,NAVEEN NAGAR, WARD VII(I), JASSIAN ROAD,HAIBOWAL KALAN, LUDHIAN A. LUDHIANA PAN:AMZPK3890M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PARIKSHIT AGGA RWAL RESPONDENT BY : SHRI S.K.MITTAL,DR DATE OF HEARING : 19.05.2016 DATE OF PRONOUNCEMENT : 23.05.2016 O R D E R THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS)-3, LUDHIANA DATED 28.01.2016 FOR ASSESSMENT YEAR 2007-08. 2. BRIEF FACTS OF THE CASE ARE THAT NOTICE UNDER SE CTION 148 OF THE ACT WAS ISSUED WHICH WAS SERVED UPON ASSESSEE ON 04.08.2010. THE RETURN FILED UNDER SEC TION 148 WAS REVISED SHOWING TOTAL BROKERAGE INCOME AT R S. 16,23,717/- PLUS OTHER INCOME OF RS. 22,700/- AND N ET PROFIT OF RS. 1,98,286/- WAS DECLARED. IN THE ORIG INAL RETURN, ASSESSEE HAD SHOWN TOTAL RECEIPTS OF RS. 7,93,144/- AND NET PROFIT OF RS. 1,98,286/-. THE 2 ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN THE BASIS OF FRESH INCOME AND EXPENDITURE STATEMENT WHEN ASSE SSEE HAD ALREADY FILED THE SAME ALONGWITH THE ORIGINAL I NCOME AND WHY THE FRESH INCOME AND EXPENDITURE MAY NOT BE FILED. THE ASSESSEE SUBMITTED BEFORE ASSESSING OFF ICER THAT RETURN WAS FILED ON NO ACCOUNT BASIS WITH FIGU RES OF ONLY GROSS RECEIPTS AND NET PROFIT. THE INCOME & EXPENDITURE ACCOUNT HAS BEEN FILED IN RESPONSE TO N OTICE UNDER SECTION 148 OF THE INCOME TAX ACT. THE ASSES SING OFFICER, AFTER, CONSIDERING EXPLANATION OF THE ASSE SSEE NOTED THAT INCOME & EXPENDITURE STATEMENT HAS BEEN FILED BY ASSESSEE JUST TO SUPPRESS THE NET PROFIT. IN TH E ORIGINAL RETURN OF INCOME, ASSESSEE HAS SHOWN TOTAL RECEIPTS OF RS. 7,93,144/- AGAINST WHICH NET PROFIT OF RS. 1,98,286/- HAS BEEN DECLARED. THUS, ASSESSEE HAS CLAIMED TOTAL BUSINESS EXPENSES OF RS. 5,94,858/-. NOW, IN THE RE-ASSESSMENT PROCEEDINGS INITIATED ON THE B ASIS OF SUPPRESSED TURNOVER SHOWN BY THE ASSESSEE IN THE RE TURN OF INCOME, THE ASSESSEE HAS COME FORWARD WITH FRESH INCOME & EXPENDITURE ACCOUNT SHOWING TOTAL EXPENSES OF RS. 14,48,131/-. THE INCOME & EXPENDITURE STATEMEN T NOW FILED BY THE ASSESSEE CANNOT BE CONSIDERED AS T RUE BECAUSE IT IS PREPARED TO SUPPRESS THE NET INCOME O F THE ASSESSEE BY INCREASING EXPENSES FOR WHICH ASSESSEE HAS NO EXPLANATION. 2(I) IT WAS ALSO NOTED THAT THE BUSINESS EXPENSES CLAIMED OF RS. 14,48,131/- HAS ALSO NOT BEEN SUPPOR TED 3 BY ANY EVIDENCES. SAME WAS, THEREFORE, REJECTED. THE EXPENSES CLAIMED IN THE ORIGINAL RETURN OF INCOME I N A SUM OF RS. 5,94,858/- HAVE BEEN ALLOWED AGAINST TOT AL GROSS RECEIPTS OF RS. 16,23,717/-. THEREFORE, ADDI TION OF RS. 8,30,573/- WAS MADE AGAINST THE ASSESSEE. 3. THE ASSESSEE CHALLENGED THE ADDITION OF RS. 8,30,573/- BEFORE LD. CIT(APPEALS). IT WAS SUBMITT ED THAT ASSESSEE IS ENGAGED IN RETAIL MOBILE/TELECOMMUNICAT ION BUSINESS, MAINLY CONSISTING OF SALE OF NEW MOBILE CONNECTIONS, BILLINGS, MOBILE RECHARGING ETC. OF M/ S SPICE COMMUNICATIONS LTD. DURING THE YEAR UNDER CONSIDERATION, ASSESSEE HAS RECEIVED COMMISSION AND BROKERAGE COMMISSION FROM M/S SPICE COMMUNICATIONS LTD. OF RS. 16,23,717/- AND TDS OF RS. 91,417/- WAS DEDUCTED FROM THIS INCOME. IN ORDER TO EARN COMMIS SION, ASSESSEE HAD INCURRED EXPENSES ON ACCOUNT OF SALARY PAID TO STAFF, RENT FOR THE PREMISES, CONVEYANCE, TRANSP ORTATION AND PUBLICITY EXPENSES ETC. WHICH ARE INCIDENTAL TO THE BUSINESS. THE NATURE OF BUSINESS OF ASSESSEE IS OF RETAIL OUTLET, THEREFORE, THERE IS NO REQUIREMENT TO KEEP THE REGULAR BOOKS OF ACCOUNT. THE ORIGINAL RETURN WAS FILED AS NO ACCOUNT CASE. PROVISIONS OF SECTION 44AF APPLY TO THE TOTAL RECEIPTS AND PROFIT WOULD WORK OUT TO APPROXI MATING RS. 81,186/- I.E. 5% OF RS. 16,23,717/-. HOWEVER, ASSESSEE HAS DECLARED HIGHER INCOME OF RS. 1,98,286 /-. IT WAS, THEREFORE, SUBMITTED THAT ADDITION IS WHOLLY UNJUSTIFIED. 4 4. THE LD. CIT(APPEALS), CONSIDERING THE EXPLANATIO N OF THE ASSESSEE, DISMISSED THE APPEAL OF THE ASSESSEE. HIS FINDINGS IN PARA 4.5 OF THE IMPUGNED ORDER ARE REPR ODUCED AS UNDER : 4.5 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND FACTS OF THE CASE ON RECORD IN THE CASE OF THE APPE LLANT THE RETURN OF INCOME WAS FILED DECLARING PROFIT OF RS. 198286/- A GAINST TOTAL RECEIPTS OF RS. 7,93,144/-. ACTUALLY, THE APPELLANT HAS EARNED GROSS RECEIPTS ON ACCOUNT OF BROKERAGE INCOME OF RS. 16,32,717/-. IN RESPONSE TO NOTICE ISSUED U/S 148, AS PER THE RETURN FILED, NET PROFIT OF RS. 198287/- WAS DECLARED AND A REVISED INCOME AND EXPENDITURE ACCOU NT WAS FILED WHICH HAS BEEN REJECTED BY THE ASSESSING OFFICER. THE ASS ESSING OFFICER HAS ALLOWED EXPENSES AS CLAIMED IN THE ORIGINAL RETURN THROUGH THOSE EXPENSES ARE ALSO NON SUPPORTED BY SUPPORTING BILLS . DURING APPEAL PROCEEDINGS, THE APPELLANT HAS TAKEN PLEA THAT PROVISIONS OF SEC 44AF OF THE INCOME TAX ACT, 1961, WERE APPLICABLE IN HIS CASE AND HE HAS DECLARED INCOME MORE THAN 5% OF GROSS RECEIPTS, THEREFORE, THERE WAS NO ESCAPEMENT OF INC OME. A REFERENCE WAS ALSO MADE TO THE BANK ACCOUNT OF THE APPELLANT WHER EIN BROKERAGE INCOME WAS DEPOSITED. IT WAS EXPLAINED THAT REGULAR WITHDRAWALS WERE BEING MADE FOR THE PURPOSES OF THE BUSINESS AND BAN K BALANCE AS ON 31.03.2007 WAS ONLY 44.350. IT IS OBSERVED THAT THE APPELLANT HAS NOT FILED RETURN OF INCOME ON PRESUMPTIVE BASIS. THEREF ORE, IN RESPONSE TO NOTICE ISSUED U/S 148 ALSO THE APPELLANT HAS SUBMIT TED INCOME AND EXPENDITURE A/C AND THE RETURN OF INCOME WAS NOT FI LED ON PRESUMPTIVE BASIS THEREFORE, PLEA OF THE APPELLANT REGARDING AS SESSING OF INCOME ON PRESUMPTIVE BASIS CANNOT BE ACCEPTED. PROVISIONS OF SECTION 44AFARE APPLICABLE TO RETAIL TRADE. THE ASSESSEE IS EARNING BROKERAGE FROM SPICE TELECOM, THEREFORE, PROVISIONS OF SEC 44AF ARE NOT APPLICABLE IN HIS CASE. THE ASSESSING OFFICER HAS ALLOWED EXPENSES OF RS. 5 ,94,858/- WHICH WERE CLAIMED IN THE ORIGINAL RETURN THROUGH THE SAME ARE NOT SUPPORTED WITH ANY BILLS OR VOUCHER. THE EXPENSES ALLOWED BY THE A SSESSING OFFICER ARE 5 36% OF THE TOTAL BROKERAGE INCOME RECEIVED WHICH AR E REASONABLE. MORE THAN ONE THIRD OF THE BROKERAGE INCOME HAS ALR EADY BEEN ALLOWED AS EXPENSES, THEREFORE, THE FINDINGS OF THE ASSESSI NG OFFICER ARE UPHELD AND APPEAL OF THE APPELLANT IS REJECTED. 5. IN THE RESULT, THE APPEAL OF THE APPELLANT IS D ISMISSED. 5. I HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES. 6. THE LD. COUNSEL FOR THE ASSESSEE RAISED THE FOLLOWING ADDITION GROUND OF APPEAL : 7. THAT ON FACTS, CIRCUMSTANCES AND LEGAL POSITIO N OF THE CASE, DUE TO NON-ISSUANCE OF NOTICE UNDER SECTI ON 143(2) AFTER FILING OF RETURN OF INCOME (FILED ON 25.11.2011) IN RESPONSE TO NOTICE UNDER SECTION 148 (ISSUED ON 04.08.2010) BY THE APPELLANT, THE IMPUGN ED ASSESSMENT FRAMED UNDER SECTION 143(3) IS A NULLITY , ILLEGAL AND DESERVES TO BE QUASHED. THE NOTICE UND ER SECTION 143(2) ISSUED ON 03.11.2011 CANNOT SERVE TH E MANDATORY & STATUTORY REQUIREMENT OF THE ACT AS THE SAME WAS ISSUED EVEN PRIOR TO THE FILING OF RETURN OF INCOME BY THE APPELLANT. 7. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSEE FILED RETURN OF INCOME IN RESPONSE TO NOTI CE UNDER SECTION 148 ON 25.11.2011 (PB-25) SERVED ON 04.08.2010, THEREFORE, ISSUE OF NOTICE UNDER SECTIO N 143(2) OF THE ACT ON 03.11.2011 IS WITHOUT ANY BASI S AND ASSESSMENT TO BE QUASHED. 6 8. THE LD. DR, HOWEVER, SUBMITTED THAT ASSESSEE IN THE REVISED GROUND OF APPEAL BEFORE LD. CIT(APPEALS ) DID NOT PRESS THIS GROUND AND HAS GIVEN UP. FURTHER, ASSESSEE DID NOT FILE RETURN UNDER SECTION 148 WITH IN TIME THEREFORE, THERE WAS NO NEED OF ISSUE OF NOTIC E UNDER SECTION 143(2) OF INCOME TAX ACT. 9. AFTER CONSIDERING RIVAL SUBMISSIONS, I AM OF THE VIEW THAT THE ADDITIONAL GROUND SHOULD NOT BE ADMIT TED FOR HEARING. THE COPY OF THE NOTICE UNDER SECTION 1 48 OF THE ACT IS FILED AT PAGE 27 OF PAPER BOOK. ADMITTE DLY, NOTICE UNDER SECTION 148 HAS BEEN SERVED UPON ASSES SEE ON 04.08.2010. THE NOTICE UNDER SECTION 148 REQUIR ED THE ASSESSEE TO DELIVER THE RETURN OF INCOME WITHIN 30 DAYS FROM THE DATE OF SERVICE. HOWEVER, THE ASSESS EE DID NOT FILE ANY RETURN OF INCOME UNDER SECTION 148 OF THE ACT WITHIN THE PERIOD SO SPECIFIED IN THE NOTIC E UNDER SECTION 148 OF THE ACT. THE ASSESSEE OF HIS OWN FILED RETURN UNDER SECTION 148 ON 25.11.2011 WHEN ASSESSMENT PROCEEDINGS WERE GOING TO BE CULMINATED AND WHICH HAVE CULMINATED ON 13.12.2011. ACCORDING TO PROVISO OF SECTION 143(2) OF THE ACT, NO NOTICE UND ER THIS SECTION SHALL BE SERVED UPON THE ASSESSEE AFTE R EXPIRY OF TWELVE MONTHS FROM THE END OF THE MONTH I N WHICH THE RETURN IS FURNISHED. THEREFORE, THE PERI OD OF SERVICE OF THE NOTICE UNDER SECTION 143(2) SHALL HA VE TO BE RECKONED FROM THE DATE OF FURNISHING OF RETURN O F INCOME BY THE ASSESSEE AS PER LAW. IN CASE, NO RET URN IS 7 FURNISHED BY THE ASSESSEE OR RETURN IS FURNISHED BELATEDLY IN CONTRAVENTION OF THE PROVISIONS OF LAW , THERE IS NO QUESTION OF ISSUING NOTICE UNDER SECTION 143( 2) OF THE ACT. IN THE CASE OF THE ASSESSEE, THE ASSESSEE DID NOT FILE RETURN OF INCOME UNDER SECTION 148 WITHIN TIME SO SPECIFIED UNDER SECTION 148 OF THE ACT AS PER NO TICE AND THE ASSESSEE BELATEDLY FILED THE RETURN UNDER SECTION 148 OF THE ACT ON 25.11.2011 AND ASSESSMENT ORDER IS PASSED ON 13.12.2011, THEREFORE, THERE IS NO QUESTION OF ISSUING ANY NOTICE UNDER SECTION 143(2) OF THE ACT. NOTICE ISSUED EARLIER ON 03.1 1.2011 WAS ALSO NOT REQUIRED TO BE ISSUED. THE SAME IS INSIGNIFICA NT. THE ASSESSEE CANNOT TAKE BENEFIT OF HIS OWN WRONGS. THE ASSESSEE BY FILING BELATED RETURN CANNOT THWART THE PROVISIONS OF INCOME TAX ACT. FURTHER, THE ASSESSE E RAISED THIS ISSUE IN GROUNDS OF APPEAL BEFORE LD. CIT(APPEALS) BUT ON FILING REVISED GROUNDS OF APPEA L, THIS ISSUE WAS ABANDONED/GIVEN UP. NO EXPLANATION HAS BEEN GIVEN WHY THE SAME GROUND WAS GIVEN UP BEFORE LD. CIT(APPEALS). THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES ABOVE, I AM NOT INCLINED TO ADMIT THE ADDITIONAL GROUND OF APPEAL WHICH HAS NO MERIT AT ALL AND WOULD NOT GO TO THE ROOT OF THE MA TTER. THE APPLICATION FOR ADMISSION OF THE ADDITIONAL GRO UND IS ACCORDINGLY, REJECTED. 8 10. THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS INITIATION OF PROCEEDINGS UNDER SECTION 148 OF THE ACT. SAME IS, THEREFORE, DISMISSED BEING NOT PRESSED. 11. THE LAST ISSUE IS ADDITION MADE ON MERIT IN A S UM OF RS. 8,30,573/- ON THE REMAINING GROUNDS. 12. AFTER CONSIDERING RIVAL SUBMISSIONS, I DO NOT F IND ANY MERIT IN THIS GROUND OF APPEAL OF THE ASSESSEE. THE ASSESSEE ADMITTED TO HAVE RECEIVED COMMISSION AND BROKERAGE COMMISSION FROM M/S SPICE COMMUNICATION LTD. THE ASSESSEE IN THE INCOME & EXPENDITURE ACCO UNT ALSO STATED TO HAVE RECEIVED BROKERAGE INCOME. THE ASSESSEE FILED RETURN OF INCOME ORIGINALLY BUT IT W AS NOT FILED UNDER SECTION 44AF OF THE ACT. THEREFORE, PRESUMPTIVE PROVISIONS WERE NOT AVAILED TO BY THE ASSESSEE. THE ASSESSEE CLAIMED HIS CASE TO BE ON NO ACCOUNT BASIS AND CLAIMED THAT SINCE INCOME DECLARE D IN THE RETURN OF INCOME IS MORE THAN PRESUMPTIVE INCOM E UNDER SECTION 44AF OF THE ACT, THEREFORE, NO ADDITI ON SHOULD BE MADE. THE LD. CIT(APPEALS), THEREFORE, R IGHTLY NOTED THAT EVEN THE ORIGINAL RETURN OF INCOME SO FI LED WAS NOT FILED ON PRESUMPTIVE BASIS. THE ASSESSEE A LSO DID NOT FILE RETURN UNDER SECTION 148 OF THE ACT ON THE BASIS OF PRESUMPTIVE INCOME UNDER SECTION 44AF OF T HE ACT. FURTHER THE PROVISIONS OF SECTION 44AF OF THE ACT ARE APPLICABLE TO RETAIL TRADERS. HOWEVER, THE ASS ESSEE IS EARNING BROKERAGE AND COMMISSION, THEREFORE, PROVISIONS OF SECTION 44AF OF THE ACT WOULD NOT APP LY IN 9 THE CASE OF THE ASSESSEE. NO EXPLANATION HAS BEEN GIVEN BY ASSESSEE AS TO HOW ASSESSEE IS DOING MOBILE TRAD ING. 12(I) THE ASSESSING OFFICER, THOUGH ALLOWED CERTAI N EXPENSES AS PER ORIGINAL INCOME & EXPENDITURE ACCOU NT, BUT EVEN AT THE ASSESSMENT STAGE, ASSESSEE DID NOT FILE ANY EVIDENCE IN SUPPORT OF THE EXPENDITURE. WHATEV ER EXPENDITURE HAVE NOW BEEN CLAIMED IN FRESH INCOME & EXPENDITURE ACCOUNT, ASSESSEE HAS NOT PRODUCED ANY EVIDENCE BEFORE THE AUTHORITIES BELOW AS WELL AS BE FORE THE TRIBUNAL. IT IS WELL SETTLED LAW THAT WHEN ASSE SSEE CLAIMED DEDUCTION OF THE EXPENDITURE, ASSESSEE SHAL L HAVE TO PROVE THAT SAME EXPENDITURES HAVE BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND SAME SHOULD BE SUPPORTED BY COGENT AND RELIABLE EVIDENCE. HOWEVER, ASSESSEE HAS NOT PRODU CED ANY EVIDENCE IN SUPPORT OF THE EXPENSES. FURTHER, IT IS NOT EXPLAINED BY THE ASSESSEE HOW THE EXPENDITURE H AVE BEEN INCREASED FROM THE EXPENSES CLAIMED IN THE ORI GINAL RETURN OF INCOME. THEREFORE, THE TOTALITY OF THE F ACTS AND CIRCUMSTANCES CLEARLY SHOW THAT ASSESSEE HAD HIGHER INCOME ON ACCOUNT OF BROKERAGE WHICH WAS SUPPRESSED IN THE ORIGINAL RETURN OF INCOME, THEREF ORE, IN ORDER TO REDUCE THE TAXABLE INCOME, ASSESSEE HAS FABRICATED THE FRESH INCOME AND EXPENDITURE ACCOUNT INFLATING THE EXPENSES WHICH WERE ALSO NOT SUPPORTE D BY ANY EVIDENCES OR MATERIAL ON RECORD. 10 12(II) THE LD. CIT(APPEALS) WAS, THEREFORE, JUSTI FIED IN REJECTING THIS GROUND OF APPEAL OF THE ASSESSEE. T HERE IS, THUS, NO MERIT IN THE REMAINING GROUNDS OF APPE AL OF THE ASSESSEE. THE SAME ARE, THEREFORE, DISMISSED. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED: 23 RD MAY, 2016. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT/CHD