Shri Manish Bhargava, Bhopal V. THE ITO-3(2), Bhopal

ITA 314/IND/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5988 (ITAT-INDORE)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 08-06-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 07-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: AJAY K CHHAJED
• Keywords: Peak credit
• Section: 234B; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE (SINGLE MEMBER CASE) BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER I.T.A.NO.314/IND/2016 A.Y. : 2005-06 SHRI MANISH BHARGAVA, ITO, PROP. M/S. MANISH TRADERS, VS 3(2), BHOPAL BHOPAL APPELLANT RESPONDENT PAN NO. AFVPM3406K A PPELLANT BY : SHRI AJAY K. CHHAJED, ADV. RESPONDENT BY : SHRI R. A. VERMA, DR O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A)-2, BHOPAL, DATED 20.01.2016 FOR THE ASSES SMENT YEAR 2005-06. DATE OF HEARING : 08 .0 6 20 16 DATE OF PRONOUNCEMENT : 08 .0 6 . 201 6 SHRI MANISH BHARGAVA, BHOPAL VS. ITO, 3(2), BHOPAL I.T.A.NO. 314/IND/2016 A.Y. 2005-06 2 2 2. THE ASSESSEE HAS TAKEN AS MANY AS NINE GROUNDS OF APPEAL. THE LD. AUTHORIZED REPRESENTATIVE FOR THE A SSESSEE ARGUED ONLY GROUNDS NO. 2, 7 & 8, AND THE REST OF THE GROUNDS WERE NOT PRESSED. HENCE, THE REMAINING GROUNDS ARE D ISMISSED AS NOT PRESSED. GROUNDS NO. 2, 7 & 8 READ AS UNDER :- 2. THAT LOOKING TO THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIA(A)-II ERRED IN LAW IN HOLDING THAT THE CREDITS AGGREGATING TO RS. 13,43,253/- BEING CREDITS IN THE BANK ACCOUNT OF THE ASSESSEE WERE INCOME LIABLE TO BE ADDED U/S 68 ,OF THE INCOME-TAX ACT, 1961. 7. THAT LOOKING TO THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIA(A)-II ERRED IN CHARGING INTEREST U/S 234A RS. 4,441/- AND 234B RS. 4,48,036/- RESPECTIVELY WHEREAS THERE WAS NO LIABILITY OF PAYMENT OF TAX. 8. THAT LOOKING TO THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIA(A)-II ERRED IN UPHOLDING INTEREST OF RS. 16,428 U/S 234C AS SINCE THE LEVY OF INTEREST U/S 234C IS PEGGED WITH THE TAX SHRI MANISH BHARGAVA, BHOPAL VS. ITO, 3(2), BHOPAL I.T.A.NO. 314/IND/2016 A.Y. 2005-06 3 3 CHARGEABLE ON THE RETURNED INCOME AND AS IN THE INSTANT CASE NO TAX WAS CHARGEABLE AS TAX ON THE RETURNED INCOME THEREFORE SUCH LEVY COULD NOT BE VARIED WITH THE TAX CHARGEABLE ON THE ASSESSED INCOME. THEREFORE, THE SAID LEVY BE CANCELLED. 3. THE SHORT FACTS OF THE CASE ARE THAT DURING THE CO URSE OF ASSESSMENT PROCEEDINGS, IT WAS FOUND THAT THE ASS ESSEE WAS HAVING BANK ACCOUNT IN IDBI BANK, WHEREIN THE ASSESS EE WAS HAVING CREDIT AGGREGATING TO RS. 13,43,253/- IN HIS BANK ACCOUNT. THE AO HAS ADDED THIS AMOUNT U/S 68 OF THE INCOME- TAX ACT, 1961. THE ASSESSEE WAS CLAIMING THAT THE AS SESSEE HAS SALE RECEIPTS FROM SALE OF TYRES AND TUBES AND THIS AMOUNT WAS DEPOSITED IN THE BANK ACCOUNT. THEREFORE, THIS I S SALE RECEIPT AND THE ASSESSEE HAS EARNED 5% NET PROFIT U /S 44AF. THEREFORE, NO ADDITION CAN BE MADE AT RS. 13,43,253 /-, BUT THE AO HAS MADE THE ADDITION OF RS. 13,43,253/- IN THE ORIGINAL ASSESSMENT ORDER. 4. THE MATTER CARRIED TO THE TRIBUNAL AND THE TRIBUNAL HAS RESTORED THIS MATTER BACK TO THE AO. THE AO REP EATED THIS ADDITION ON THE GROUND THAT THE ASSESSEE FAILED TO PRODUCE ANY SHRI MANISH BHARGAVA, BHOPAL VS. ITO, 3(2), BHOPAL I.T.A.NO. 314/IND/2016 A.Y. 2005-06 4 4 DOCUMENTARY OR OTHER EVIDENCE TO ESTABLISH THAT HE WAS ENGAGED IN SALE AND PURCHASE OF OLD TYRES AND REMOU LDED TYRES. THE ASSESSEE FAILED TO PRODUCE DOCUMENTARY O R ANY OTHER EVIDENCE TO ESTABLISH THAT THE AMOUNT DEPOSIT ED IN THE SAID BANK ACCOUNT WAS FROM THE SALE PROCEEDS OF OLD AND REMOULDED TYRES. THEREFORE, THE ADDITION WAS AGAIN R EPEATED BY CIT(A). THE ASSESSEE IS IN APPEAL BEFORE ME. 5. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS A SMALL BUSINESSMAN ENGAGED IN THE TRADING BUSINESS OF AUTOMOBILES TYRES & TUBE S. THE ASSESSEE LOOKING TO THE NATURE OF BUSINESS MANY TIM ES AS PER THE NEED OF THE CUSTOMERS REMOULD TYRES AND OLD TYR ES. THE ASSESSEE HAS ALSO SHOWN THE INCOME OF RS. 73,500/- N ET ON THE TURNOVER OF RS. 7,70,055/- AND THE TRANSACTION RECEIPT AND PAYMENTS OF BUSINESS HAD BEEN REFLECTED AND TRANSAC TED THROUGH SAVING BANK ACCOUNT OF THE ASSESSEE IN IDBI BANK, BHOPAL. THE LD. AUTHORIZED REPRESENTATIVE FOR THE A SSESSEE FURTHER SUBMITTED THAT THE ASSESSEE WAS HAVING CREDI T OF RS. 13,43,253/- TOWARDS THE SALE RECEIPTS OF THE ASSESSE E FROM THE SALE OF TYRES, TUBES ETC. AND AS PER SECTION 44AF O F THE SHRI MANISH BHARGAVA, BHOPAL VS. ITO, 3(2), BHOPAL I.T.A.NO. 314/IND/2016 A.Y. 2005-06 5 5 INCOME-TAX ACT, 1961, THE ASSESSEE EARNED PROFIT @ 5%. THEREFORE, THE ADDITION SHOULD BE REDUCED FROM RS. 13,43,253/- TO RS. 67,163/-. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ALSO ALTERNATIVELY SUBMITTED THAT THERE ARE CREDITS IN THE BANK ACCOUNT, BUT AT THE SAME TIME THERE ARE DEBITS ALSO AND HENCE THE ADDITION S HOULD HAVE BEEN WORKED OUT ON THE BASIS OF PEAK CREDIT BECAUSE SUCH TRANSACTIONS WERE NOT FROM THE OUTSIDE PARTIES, BU T RETURN ON ACCOUNT OF ASSESSEES BUSINESS ACTIVITY. 6. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE WAS NOT ABLE PROVE ANYTHING BEFORE THE AO AND LD. CIT(A) THAT HE WAS HAVING BUSINESS TRANSACTIONS AND THE SAME WERE DEPO SITED IN IDBI BANK. THE LD. DEPARTMENTAL REPRESENTATIVE REL IED UPON THE ORDERS OF THE AUTHORITIES BELOW. 7. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PAR TIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, I FIND THAT THE ASSESSEE HAS FILED THE RETURN OF INCOME. THE AS SESSEE IS AN INDIVIDUAL AND CARRYING ON PROPRIETORY BUSINESS IN THE NAME AND STYLE OF MANISH TRADERS AND THE ASSESSEE IS A T RADER IN SHRI MANISH BHARGAVA, BHOPAL VS. ITO, 3(2), BHOPAL I.T.A.NO. 314/IND/2016 A.Y. 2005-06 6 6 WHOLESALE AND RETAIL BUSINESS OF TYRES AND TUBES. TH E AO FOUND THAT THERE WAS CREDIT ENTRY OF RS. 13,43,253/- IN HIS BANK ACCOUNT. THE ASSESSEE HAS CONTENDED BEFORE THE AO THAT THE ASSESSEE IS IN OLD TYRE BUSINESS AND OUT OF OLD TYRE BUSINESS, HE WAS MAKING CREDIT IN THE BANK ACCOUNT A ND HE WAS WITHDRAWING THE AMOUNT FROM THE SCRAP TYRE BUSINE SS. THE ASSESSEE CARRIED OUT BUSINESS ACTIVITY. THEREFO RE, I AM OF THE VIEW THAT WHEN THE DEPARTMENT HAS NOT PRODUCED AN Y EVIDENCE THAT THE ASSESSEE HAS CARRIED OUT ANY OTHE R ACTIVITY, THEREFORE, THE ADDITION HAS TO BE MADE ON THE BASIS OF PEAK AMOUNT FROM THIS BANK ACCOUNT ONLY. THEREFORE, I RE STORE THIS ISSUE BACK TO THE FILE OF AO. THE AO IS DIRECTED TO VERIFY THE BANK ACCOUNT, WHEREIN DEBIT AND CREDIT ENTRIES ARE T HERE. THEREFORE, IT IS TO BE TREATED AS BUSINESS TRANSACT ION AND ONLY ADDITION SHOULD BE MADE IS ONLY PEAK CREDIT ON SUCH TRANSACTION. THE AO IS DIRECTED TO VERIFY THE PEAK CREDIT. THE ASSESSEE HAS SUBMITTED THAT SUCH PEAK CREDIT IS RS. 64,571/-, BUT I AM OF THE VIEW THAT IT REQUIRES VERIFICATION A T THE END OF THE AO. THEREFORE, THE AO IS DIRECTED TO VERIFY THE SAME AND DECIDE THE MATTER AS PER LAW. I AM ALSO OF THE VIEW T HAT WHAT SHRI MANISH BHARGAVA, BHOPAL VS. ITO, 3(2), BHOPAL I.T.A.NO. 314/IND/2016 A.Y. 2005-06 7 7 CAN BE ADDED AS PEAK CREDIT AND 5% OF THE AGGREGATE TRANSACTION OF RS. 13,43,253/- SHOULD BE ADDED AS N ET PROFIT. THEREFORE, THE NET PROFIT COMES TO RS. 67,163/-, WHI CH SHOULD BE ADDED AS NET PROFIT. THEREFORE, THE NET PROFIT O F RS. 67,163/- SHOULD BE ADDED AND THE PEAK SHOULD BE ADDED TO THE INCOME OF THE ASSESSEE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. THIS ORDER HAS BEEN PRONOUNCED IN THE OP EN COURT ON 8 TH JUNE, 2016, SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 8 TH JUNE, 2016. CPU*