Shri.Sadiq Mohammed Ahmed , Mangalore V. Income Tax Officer WArd-2(3), Mangalore

ITA 308/BANG/2018

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5456 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 02-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PADMAMEENAKSHI J
• Assessee Lawyers: R CHANDRASHEKAR
• Keywords: Opportunity of being heard
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-A BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO. 308 / BANG/201 8 ASSESSMENT YEAR : 2010 - 11 SHRI SADIQ MOHAMMED AHMED, PROP: M/S. S.S. ENTERPRISES, D.NO. 4, BADRIYA COMPLEX, MAIN ROAD, PERUVAL , BANTWAL TQ. D.K. PAN: BJSPS2800J VS. THE INCOME TAX OFFICER, WARD 2 (3), MANGALURU. APPELLANT RESPONDENT APPELLANT BY : SHRI R. CHANDRASHEKAR, ADVOCATE RESPONDENT BY : SMT. PADMA MEENAKSHI, JCIT(DR) DATE OF HEARING : 1 4 .0 3 .2018 DATE OF PRONOUNCEMENT : 1 4 . 0 3 .201 8 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE WHICH IS DIREC TED AGAINST THE ORDER OF LD. CIT (A) 10, BANGALORE DATED 13.12.2017 FOR ASSESS MENT YEAR 2010-11. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE TURNOVER OF RS.4,54,91,072/- DETERMI NED BY THE LEARNED ASSESSING AUTHORITY AS AGAINST RS.1,88,76,318/- DEC LARED BY THE APPELLANT FOR THE ASSESSMENT YEAR 2010-2011. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT THE APPELLANT DID NOT FURNISH REASONS FOR WITHDRAWAL AND RE-DEPOSIT OF CASH FROM ONE BANK TO ANOTHER, THOUGH COPIES OF EXPLANATIONS DATED 09-01-2015 AND 18-12-2015 WERE F ILED AT THE TIME OF HEARING. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT APPELLANT'S EXPLANATION IN REGARD TO W ITHDRAWALS AND DEPOSITS IS RELATABLE TO UNDER INVOICING TRANSACTIO NS AND IS NOT ENTITLE TO SET OF AGAINST TURNOVER. ITA NO.308/BANG/2018 PAGE 2 OF 5 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE CONSIDERED THE ESTIMATION OF PROFIT @ 2.5% AS AGAIN ST NORMAL 0.5% WHILE CONSIDERING THE TURNOVERS DECLARED BY THE APP ELLANT. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING LEVY OF INTERESTS CHARGED U/S.234A AND 23 4B OF THE ACT. THE APPELLANT PRAYS LEAVE OF THIS HONBLE TRIBUNAL TO ADD/MODIFY/DELETE ANY GROUND OR GROUNDS AT THE TIME OF HEARING. 3. IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT ALTH OUGH SEVERAL GROUNDS ARE RAISED BY THE ASSESSEE BUT THE ISSUE INVOLVED IS ON LY ONE AS TO WHETHER THE CIT(A) IS JUSTIFIED IN HOLDING THAT THE TURNOVER OF THE ASSESSEE IS RS. 4,54,91,072/- AS DETERMINED BY THE AO AS AGAINST RS . 1,88,76,318/- DECLARED BY THE ASSESSEE FOR THE PRESENT YEAR. HE SUBMITTED THAT IT IS TRUE THAT IN COURSE OF SURVEY PROCEEDINGS U/S. 133A OF IT ACT ON 07.07. 2011, IT WAS STATED BY THE ASSESSEE THAT THE TURNOVER OF THE ASSESSEE FOR ASSE SSMENT YEAR 2010-11 IS RS. 4,54,91,072/-. BUT THIS STATEMENT WAS BECAUSE OF CONFUSION AND MENTAL TENSION AT THAT POINT OF TIME DUE TO WHICH THE ASSE SSEE COULD NOT GET THE CORRECT TURNOVER AS PER BOOKS OF ACCOUNTS AND THEREFORE, RO UGHLY ESTIMATED THE TURNOVER BY AGGREGATING THE CREDITS IN THE BANK PAS S BOOKS. HE SUBMITTED THAT LATER ON, IT WAS EXPLAINED BY ASSESSEE BEFORE AO AN D CIT(A) THAT THERE ARE VARIOUS DEPOSITS OF CASH IN VARIOUS BANK ACCOUNTS O UT OF EARLIER CASH WITHDRAWAL FROM BANK AND THEREFORE, SUCH CASH DEPOSIT CANNOT B E CONSIDERED AS PART OF ASSESSEES TURNOVER BUT THE AO AND CIT(A) HAS NOT A CCEPTED THIS EXPLANATION OF THE ASSESSEE. HE DRAWN OUR ATTENTION TO PARA NO . 5.3 OF THE ORDER OF CIT(A) AND SUBMITTED THAT AS PER THIS PARA OF THE ORDER OF CIT(A), THIS IS STATED BY CIT(A) THAT ASSESSEE DOES NOT HAVE AN ANSWER TO THE QUESTION AS TO WHY THE CASH WAS WITHDRAWN AND WHY WAS IT DEPOSITED AGAIN. HE SUBMITTED THAT CIT(A) HAS NOT CONSIDERED THE REPLY FILED BY THE ASSESSEE BEFORE THE AO ON 17.12.2015 COPY AVAILABLE ON PAGES 3 AND 4 OF THE P APER BOOK AS PER WHICH IT WAS EXPLAINED BY ASSESSEE THAT THE AMOUNT WAS WITHD RAWN FROM ONE BANK AND DEPOSITED IN OTHER BANK ACCOUNT FOR THE PURPOSE OF CLEARING THE CHEQUES ISSUED AND BESIDES THIS, THE ASSESSEE USED TO WITHDRAW HEA VY CASH FROM THE BANK ACCOUNT EVERYDAY MORNING FOR PURCHASING THE MATERIA L AND THE BALANCE AMOUNT ITA NO.308/BANG/2018 PAGE 3 OF 5 LEFT UNUTILISED WERE BEING DEPOSITED IN BANK ACCOUN T BECAUSE THE ASSESSEE HAS NO SAFETY TO KEEP HEAVY CASH AT HIS RESIDENCE BECAU SE THE ASSESSEE LIVED IN A RENTED HOUSE ONLY. HE SUBMITTED THAT THIS WAS EXPL AINED BY THE ASSESSEE BEFORE THE AO AS PER THIS LETTER AND COPY OF THIS L ETTER WAS FILED BEFORE CIT(A) ALSO BUT THE SAME WAS NOT CONSIDERED BY CIT(A) AND THEREFORE, THE MATTER MAY BE RESTORED BACK TO THE FILE OF CIT(A) FOR FRESH DE CISION AFTER EXAMINING THIS CONTENTION OF THE ASSESSEE. AT THIS JUNCTURE, IT W AS OBSERVED BY THE BENCH THAT MERELY STATING THAT CASH WITHDRAWN EARLIER IS REDEP OSITED IN PART IS NOT ENOUGH, AND THE ASSESSEE HAS TO SUBMIT A DETAILED WORKING A S TO HOW MUCH OF THE AMOUNT DEPOSITED IN VARIOUS BANKS IS OUT OF EARLIER WITHDRAWAL FROM BANK AND WHICH ARE THOSE BANKS AND BRANCHES AND WHERE IS THE LOCATION OF SUCH BRANCHES BECAUSE IF THE DEPOSIT IS IN A BANK BRANCH NEAR TO THE RESIDENCE OF THE ASSESSEE THEN IT MAY BE ACCEPTED (SUBJECT TO OTHER RELEVANT ASPECTS) THAT DEPOSIT IN SUCH BANK BRANCHES MAY BE OUT OF EARLIER WITHDRAWAL BUT IF SUCH CASH DEPOSIT IS IN A BRANCH WHICH IS NOT CLOSEST FROM T HE OFFICE/RESIDENCE OF THE ASSESSEE AS COMPARED TO OTHER BANK BRANCHES, THEN I T HAS TO BE ACCEPTED THAT THOSE DEPOSITS ARE BY CUSTOMERS ONLY. IN REPLY, IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT THESE DETAILS ARE NOT READILY AVAILAB LE AND THEREFORE, THE SAME WILL BE SUBMITTED BEFORE CIT (A) IF THE MATTER IS R ESTORED BACK TO THE FILE OF CIT (A). AS AGAINST THIS, THE LD. DR OF REVENUE SUPPOR TED THE ORDERS OF AUTHORITIES BELOW. SHE ALSO SUBMITTED THAT THIS FINDING IS ALS O GIVEN BY CIT (A) ON PAGE 4 OF HIS ORDER THAT THE ASSESSEE HIMSELF HAS ADMITTED THAT HE HAS BEEN UNDER INVOICING THE SALES AND PURCHASES TO THE EXTENT OF 50% TO AVOID VAT AND INTERESTINGLY ENOUGH, THE ASSESSEE IS NOW TRYING TO EXPLAIN HIS LOW TURNOVER AS PER THAT VERY VAT RETURN WHICH HE HIMSELF HAS ADMIT TED TO BE UNRELIABLE. HE SUBMITTED THAT AS PER VAT RETURNS FILED BY THE ASSE SSEE, THE TURNOVER WAS OF RS. 1,88,76,318/-. AS PER LETTER DATED 29.01.2015 SUBMITTED BY ASSESSEE BEFORE THE AO AND REPRODUCED BY THE AO ON PAGE NO. 5 OF THE ASSESSMENT ORDER, THE TURNOVER DECLARED BY THE ASSESSEE IN THE COURSE OF SURVEY IS OF RS. 4,54,91,072/- AND IT IS NEAR TO THAT STATEMENT OF 5 0% UNDER INVOICING BECAUSE IF WE ADD 50% TO THE TURNOVER AS PER VAT RETURNS, THE SAME COMES TO RS. 3,77,52,636/- AS AGAINST THE TURNOVER ADOPTED BY TH E AO AT RS. 4,54,91,072/-. HE SUBMITTED THAT UNDER THESE FACTS, THE ORDER OF C IT (A) SHOULD BE CONFIRMED. ITA NO.308/BANG/2018 PAGE 4 OF 5 4. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. I FIND THAT THIS IS TRUE THAT AS PER LETTER DATED 17.12.2015 SUBMITTED BY THE ASSESSEE TO THE A O, COPY OF WHICH WAS FILED BEFORE CIT (A) ALSO BY THE ASSESSEE, THE ASSESSEE H AS TRIED TO EXPLAIN THE REASONS FOR CASH WITHDRAWAL AND REDEPOSIT IN BANKS. AS PER THE ORDER OF CIT (A), THE ASSESSEE HAS NOT ANSWERED THIS QUESTION AS TO WHY THE CASH WAS WITHDRAWN AND WHY IT WAS DEPOSITED AGAIN. IN MY CO NSIDERED OPINION, EVEN IF REPLY OF ASSESSEE WAS NOT ACCEPTABLE TO THE CIT (A) THEN ALSO, HE HAS TO GIVE REASONS AS TO WHY THE REPLY WAS NOT ACCEPTABLE BUT HE CANNOT SAY THAT THE ASSESSEE HAS NOT GIVEN REPLY. HENCE I SET ASIDE TH E ORDER OF CIT (A) AND RESTORE THE MATTER BACK TO THE FILE OF CIT (A) FOR FRESH DECISION AFTER CONSIDERING THE REPLY FILED BY THE ASSESSEE REGARDING REASONS F OR CASH WITHDRAWAL AND REDEPOSIT IN BANK. THE CIT(A) SHOULD ALSO EXAMINE THIS ASPECT AS TO WHAT IS THE AMOUNT OF CASH DEPOSIT (AS PER THE ASSESSEE) OU T OF EARLIER WITHDRAWAL AND WHICH ARE THOSE BANKS AND BRANCHES IN WHICH AS PER THE ASSESSEE, THE AMOUNT OF DEPOSIT IN CASH IS OUT OF EARLIER WITHDRAWAL AND THIS HAS TO BE SEEN AS TO WHETHER SUCH BANK BRANCHES ARE NEAREST TO THE ASSES SEES OFFICE / RESIDENCE OR NOT BECAUSE IF THOSE BANK BRANCHES ARE NOT NEAREST TO THE ASSESSEES OFFICE / RESIDENCE THEN IT HAS TO BE ACCEPTED THAT THE DEPOS ITS IN ALL THOSE BRANCHES ARE BY THE CUSTOMERS ONLY AND NOT BY THE ASSESSEE OUT O F EARLIER CASH WITHDRAWAL BECAUSE NO PERSON WILL GO TO A BRANCH TO DEPOSIT EX TRA CASH LEAVING ANOTHER BANK BRANCH NEAR TO HIS OFFICE/RESIDENCE. THIS IS A LSO TO BE SEEN THAT CASH WAS AVAILABLE OR NOT FOR REDEPOSIT ON SUCH DATE AFTER D EDUCTING THE PURCHASE/EXPENSES TILL THAT DATE FROM CASH WITHDRAW AL TILL THAT DATE, WHICH MAY BE WORKED OUT @ 97.5% OF SALES TILL THAT DATE ACCEP TING THAT THE CLOSING STOCK WAS EQUAL TO OPENING STOCK. THE CIT (A) SHOULD EXA MINE THIS ASPECT ALSO WHILE DECIDING THE MATTER AFRESH. THE ASSESSEE HAS TO GI VE PROPER DETAILS WITH EVIDENCE IN THIS REGARD. THIS GOES WITHOUT SAYING THAT THE CIT(A) SHOULD PROVIDE ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH SIDES BEFORE DECIDING THIS ISSUE AFRESH AS PER ABOVE DISCUSSION. ITA NO.308/BANG/2018 PAGE 5 OF 5 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- (ARUN KUMAR GARODIA) ACCOUNTANT MEMBER BANGALORE, DATED, THE 14 TH MARCH, 2018. /MS/ COPY TO: 1. APPELLANT 4. CIT (A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.