Shri Rajeshkumar Pravinchandra Jariwala, Surat V. The Income Tax Officer, Ward-2(4), Surat

ITA 2988/AHD/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6068 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 14-02-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 16-12-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: S N DIVATIA
• Keywords: Unexplained cash credit; Business income; Principle of natural justice; Peak credit
• Section: 143(3)

Judgement Text

ITA NO. 2 988 / AHD / 201 3 A SSESSMENT Y EAR: 20 0 9 - 10 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH, SMC , AHMEDABAD [CORAM: PRAMOD KUMAR AM] ITA NO. 2988 /AHD/201 3 ASSESSMENT Y EAR : 20 0 9 - 10 RAJESHKUMAR PRAVINCHANDRA JARIWALA, ..... .......... .APPELLANT 2/2203/B, DAHI FALIA, RUDARPURA, SURAT 3 95 003. [PAN: A HPPJ 6097 C ] VS. INCOME TAX OFFICER , WARD 2 ( 4 ), SURAT. .. ......... RESPONDENT APPEARANCES BY: S.N. DIVATIA , FOR THE APPELLANT D INESH SINGH , FOR THE RESPONDENT D ATE OF CONCLUDING THE HEARING : 1 4 . 0 2 . 201 7 DATE OF PRONOUNCING THE ORDER : 28 .04. 2017 O R D E R 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 15 TH OCTOBER 2013 , PASSED BY THE LEARNED CIT(A) , IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME T AX ACT 1961 , FOR THE ASSESSMENT YEAR 200 9 - 10 . 2. G RIEVANCE S RAISED IN THIS APPEAL , ALL OF WHICH WE WILL TAKE UP TOGETHER, ARE AS FOLLOWS : - 1. 1 THE ORDER PASSED U/S.250 ON 15.10.2013 OR A.Y. 2009 - 10 BY CIT(A) - II, SURAT UPH OLDING THE ADDITION TO THE EXTENT OF RS.17,07,986/ - IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 1 .2 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN NOT CONSIDERING FULLY AND PROPERLY THE SUBMISSIONS MADE AND EVIDENCE PRODUCED BY THE APPELLANT WITH REGARD TO THE IMPUGNED ADDITION. 2.1 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN CONFIRMING THAT THE CASH DEPOSITS MADE IN SB A/C. WITH KARUR VYSYA ITA NO. 2 988 / AHD / 201 3 A SSESSMENT Y EAR: 20 0 9 - 10 PAGE 2 OF 3 BANK , SURAT WERE UNEXPLAINED AND THEREBY SUSTA INING THE ADDITION TO THE EXTENT OF RS.17,07,986/ - . 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE S WELL AS IN LAW, THE LD. CIT(A) HAS ERRED IN UPHOLDING THAT THE CASH DEPOSITS IN SB A/C. WITH KARUR VYSYA B ANK LIMITED, SURAT DID NOT REPRESENT SA LE PROCEEDS OF APPELLANT S BUSINESS IN JARI BUSINESS AT DHARMAVARAM AP. 3.1. W ITHOUT PREJUDICE TO THE ABOVE AND IN THE ALTERNATIVE, THE LD. CIT(A) OUGHT NOT TO HAVE RESTRICTED THE ADDITION TO THE EXTENT OF RS.17,07,986/ - RELYING ON NET PROFIT RATE IN JARI GLIDING WORK AS THE TRADING ACTIVITY AND GILDING ACTIVITY ARE SEPARATE ONE. 4.1 WITHOUT PREJUDICE TO THE ABOVE AND IN THE ALTERNATIVE, BOTH THE LOWER AUTHORITIES HAVE GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN NOT RESTRICTING THE IMPUGNED ADDITION TO THE EXTENT OF PEAK CREDIT OF THE SAID BANK ACCOUNT. 3. THE RELEVANT MATERIAL FACTS ARE AS FOLLOWS. THE ASSESSE IS AN INDIVIDUAL SAID TO BE CARRYING ON JARI BUSINESS ON A MODEST SCALE. THE ASSESSE IS NOT MAINTAINING ANY BOOKS OF ACCOUNTS. IN THIS BACKDROP WHE N ASSESSEE WAS CONFRONTED BY THE ASSESSING OFFICER, DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, ABOUT THE SOURCE OF CASH DEPOSITS., AGGREGATING TO RS 34,15,972, IN HIS BANK ACCOUNT, IT WAS STATED BY THE ASSESSEE THAT THESE DEPOSITS REPRESENTS SAL E PROCEEDS AND THAT THE DEPOSITS WERE MADE IN DHARMAVARAM, AP, DIRECTLY BY THE CUSTOMERS. ON THESE FACTS, THE ASSESSING OFFICER PROCEEDED TO TREAT ENTIRE DEPOSITS AS UNEXPLAINED CREDITS, AND THUS INCOME, OF THE ASSESSEE. AGGRIEVED, ASSESSE CARRIED THE MATT ER IN APPEAL BEFORE THE CIT(A) WHO RESTRICTED THE ADDITION TO 50% , I.E. RS 17,07,986, BY STATING THAT THIS ESTIMATION IS BEING MADE ON THE BASIS OF ANOTHER APPELLATE ORDER PASSED BY THE UNDERSIGNED IN APPEAL NO. CAS - II/222/11 - 12 DATED 14.10.2013, WHEREIN NET PROFIT @ 54.73% WAS SHOWN BY THE ASSESSEE FROM JARI GAILDING WORK . THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE THIS TRIBUNAL. 4. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CAS E IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 5. I FIND THAT ANOTHER SMC BENCH OF THIS TRIBUNAL, IN THE CASE OF SAMIR P JARIWALA VS ITO (ITA NO. 1120/AHD.2013; ORDER DATED 13 TH JULY 2016), HAS HELD 7.5% TO BE REASONABLE PROFIT RATE IN SIMILAR LINE OF BU SINESS. I FIND ITS QUITE FAIR AND REASONABLE. JUST BECAUSE SOME ASSESSEE ACCEPTS 54.73% PROFIT RATE, IN A RELATED ACTIVITY, THE ASSESSEE CANNOT BE FORCED TO ADOPT THE SAME. A JUDICIAL PRECEDENT FROM COORDINATE BENCH IS A FAR ITA NO. 2 988 / AHD / 201 3 A SSESSMENT Y EAR: 20 0 9 - 10 PAGE 3 OF 3 MORE USEFUL AND RELIABLE A GUID ANCE IN THE MATTER, AND I ADOPT THE SAME. GIVEN THE FACTS OF THIS CASE, IT IS ALSO A REASONABLE PRESUMPTION THAT THE ENTIRE CASH DEPOSITS, WHICH ARE MADE OUTSIDE SURAT ANYWAY AND THAT TOO DIRECTLY BY THE CUSTOMERS, REFLECT BUSINESS RECEIPTS. I, THEREFORE, DIRECT THE ASSESSING OFFICER TO RESTRICT THE ADDITION TO 7.5% OF RS 34,15,972 WHICH WORKS OUT TO 2,56,200. THE ASSESSE GETS FURTHER RELIEF OF RS 14,51,786. 6. AS I HAVE DECIDED THE APPEAL ON THE SHORT POINT SET OUT ABOVE, I SEE NO NEED TO DEAL WITH OTHER ERUDITE CONTENTIONS OF THE LEARNED COUNSEL. ALL THOSE ISSUES ARE ACADEMIC AS ON NOW. 7. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON THE 28 TH DAY OF APRIL 2017. SD/ - PRAMOD KUMAR (ACCOUNTANT MEMBER) DATED: AHMEDABAD, THE 28 TH DAY OF APRIL , 2017 . COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORD ER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD