The ITO, Ward-5(3), Baroda V. Shri Jayantilal M.Sharma, Baroda

ITA 3149/AHD/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63009 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 19-09-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 25-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C PATWARI
• Keywords: Corroborative evidences
• Section: 131

Judgement Text

, , , , C , IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, C BENCH . .. . . .. . , !' !' !' !', , , , #$ %&'( #$ %&'( #$ %&'( #$ %&'(, , , , )* + ) ' )* + ) ' )* + ) ' )* + ) ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND ANIL CHATURVEDI , ACCOUNTANT MEMBER) ITA NO.3149/AHD/2009 [ASSTT.YEAR : 2006-2007] ITO, WARD-5(3) BARODA. /VS. SHRI JAYANTILAL M. SHARMA 205,STEEL CHAMBER LAKKADPITHA ROAD BARODA. PAN : AFOPS 7638 K ( (( (-. -. -. -. / APPELLANT) ( (( (/0-. /0-. /0-. /0-. / RESPONDENT) + 1 2 )/ REVENUE BY : SHRI D.C.PATWARI 4& 1 2 )/ ASSESSEE BY : NONE 5 1 &(*/ DATE OF HEARING : 19 TH SEPTEMBER, 2012 678 1 &(*/ DATE OF PRONOUNCEMENT : 12-10-2012 )9 / O R D E R PER ANIL CHATURVEDI, ACCOUNTANT MEMBER : THIS IS THE REVENUES APPEAL AGAINST THE ORDER OF THE CIT(A). ITA NO.3149/AHD/2009 2. NONE APPEARED ON BEHALF OF THE ASSESSEE. ACCORD INGLY, WE PROCEED TO DISPOSE OF THE APPEAL EXPARTE QUA THE ASSESSEE, AFTER HEARING THE LEARNED DR AND CONSIDERING THE MATERIAL AVAILABLE ON RECORD . 3. THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUS INESS OF SCRAP DEALINGS. HE FILED HIS RETURN OF INCOME ON 21.04.20 06 DECLARING TOTAL INCOME OF RS.1,85,625/- ON SALE OF RS.1,37,73,690/- . THE CASE WAS SELECTED FOR SCRUTINY BY ISSUING NOTICE U/S.148 DATED 27-3-2 008. THE ASSESSMENT WAS FRAMED U/S.143(3) R.W.S. 147 AND THE INCOME WAS DETERMINED AT RS.5,67,61,860/- VIDE ORDER DATED 31-12-2008. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT IN THE ASSESSEES BANK ACCOUNT WITH HDFC BANK THAT THERE WERE HUGE DEPOSITS AND INQUIRIES WERE CONDUCTED BY DDIT. DURI NG THE INQUIRY IT WAS GATHERED BY DDIT THAT THE ASSESSEE WAS ENGAGED IN I SSUE OF BOGUS SALES BILLS WITHOUT EFFECTING ACTUAL SALES. ASSESSEES S TATEMENT U/S. 131 WAS RECORDED ON 12.9.2006 WHEREIN HE ADMITTED THAT HE H AD ISSUED BOGUS BILLS TO VARIOUS PERSONS ON COMMISSION BASIS. FOR THE ISS UE OF BILLS THE ASSESSEE WAS EARNING COMMISSION OF RS.150/- ON A BOGUS BILL TRANSACTION OF RS.10,000. FROM THE DETAILS OF DEPOSITS AND WITHDRA WALS FROM THE BANK ACCOUNT THE AO NOTICED THAT THE TOTAL DEPOSITS IN T HE BANK ACCOUNTS WAS OF RS.5,64,96,235/- AND WITHDRAWALS OF RS.5,63,37,634/ - DURING THE YEAR. THE ASSESSEE WAS ASKED TO FILE DETAILS OF DEPOSITS AND WITHDRAWALS FROM HIS BANK ACCOUNTS WITH SUPPORTING EVIDENCES WHICH ACCOR DING TO AO WAS NOT FILED BY THE ASSESSEE. HE CONSIDERED THE ENTIRE AMO UNT OF RS.5,64,96,235/- CREDITED IN HIS BANK ACCOUNT AS INCOME FROM UNDISCL OSED SOURCES AND AFTER ITA NO.3149/AHD/2009 MAKING OTHER ADDITIONS, THE TOTAL INCOME WAS DETERM INED AT RS.5,67,61,860/-. AGGRIEVED BY THE ACTION OF AO, TH E ASSESSEE CARRIED THE MATTER BEFORE CIT(A). AFTER CONSIDERING THE SUBMISS IONS MADE BY THE ASSESSEE AND THE REMAND REPORT SUBMITTED BY THE AO, CIT(A) PARTLY ALLOWED THE APPEAL BY HOLDING AS UNDER: 4.5. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE ASSESSMENT ORDER AND THE APPEAL ORDER OF MY PREDECE SSOR. IT IS AN ADMITTED FACT THAT BOOKS OF ACCOUNTS AND COMPLETE S UPPORTING DETAILS ARE NOT MAINTAINED BY THE APPELLANT AND MANY DISCREPANC IES WERE POINTED OUT BY THE AO. THE APPELLANT HAS BEEN STATING BEFOR E DIFFERENT AUTHORITIES OF THE DEPARTMENT THAT HE IS A PETTY SCRAP DEALER A ND THAT HE HAS BEEN INVOLVED IN ISSUING BOGUS BILLS WITHOUT ACTUAL SALE S ON COMMISSION BASIS AND THIS ASPECT HAS NOT BEEN REFUTED BY THE AO. AS STATED IN THE BODY OF ASSESSMENT ORDER BY THE AO THAT THERE WERE DEPOSITS AS WELL AS CORRESPONDING WITHDRAWALS IN THE BANK ACCOUNTS, WHI CH WAS MAINTAINED BY THE APPELLANT, ITSELF STRENGTHENS THE STAND OF T HE APPELLANT. AS STATED BEFORE INVESTIGATION WING, THE APPELLANT RECEIVES T HE CHEQUE FOR THE VALUE OF THE BOGUS BILL WHICH WAS DEPOSITED IN HIS BANK ACCOUNT AND FOR ALMOST THE SAME AMOUNT, BEARER CHEQUE USED TO BE IS SUED TO THE PARTY CONCERNED, WHICH WAS WITHDRAWN IMMEDIATELY AND THAT APPELLANT USED TO EARN COMMISSION AT THE RATE OF RS.150/- PER RS.10,0 00/-. UNDER THESE CIRCUMSTANCES, IT WOULD NOT BE PROPER TO SUBJECT AL L THE CREDITS TO TAX BUT ONLY THE COMMISSION INCOME OUGHT TO HAVE BEEN TAXED . CONSIDERING THESE FACTS, MY PREDECESSOR HAD SUSTAINED THE ADDITION TO THE EXTENT OF 2.5% OF THE CHEQUE CREDITED FOR ASSESSMENT YEAR 2005-06 IN THE CASE OF SHRI KANTILAL M SHARMA AND I AM IN AGREEMENT WITH THE RE ASONING OF MY PREDECESSOR AND ACCORDINGLY, THE ADDITION OF RS.14, 12,406/- (RS. 5,64,96,235 X 2.5%) IS CONFIRMED. 5. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE IS NOW IN APPEAL BEFORE US. 6. THE LD. D.R. SUBMITTED THAT IN THE ABSENCE OF BO OKS OF ACCOUNTS AND CORRESPONDING RECORDS THE AO WAS RIGHT IN MAKING TH E NECESSARY ADDITION. ON THE CONTRARY, HE SUBMITTED THAT THE ACT HAS MADE SPECIAL PROVISION FOR ITA NO.3149/AHD/2009 COMPUTING PROFITS AND GAINS OF RETAIL BUSINESS. AS PER PROVISIONS OF SECTION 44AF OF THE ACT, 5% OF THE TOTAL TURNOVER I S DEEMED TO BE PROFITS AND GAINS OF BUSINESS. HE THEREFORE SUBMITTED THAT SINCE IN THE PRESENT CASE, IN THE ABSENCE OF BOOKS OF ACCOUNTS ESTIMATIO N OF INCOME BE MADE @5% OF THE TOTAL CREDITS APPEARING IN THE BANK ACCO UNT. 7. WE HAVE HEARD THE LEARNED DR AND PERUSED THE MAT ERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE WAS FOUND T O HAVE BEEN ENGAGED IN THE BUSINESS OF ISSUING BILLS ON COMMISSION BASIS W ITHOUT THERE BEING ACTUAL SALE/PURCHASE OF GOODS. THE ASSESSEE HAS ADM ITTED TO THE FACT THAT HE IS ENGAGED IN THE BUSINESS OF ISSUING BOGUS BILLS. ASSESSEE HAS ADMITTED THAT ON ISSUING BOGUS BILL, HE RECEIVES THE CHEQUE FOR THE VALUE OF THE BILL WHICH WAS LATER DEPOSITED IN HIS BANK ACCOUNT AND A LMOST THE SAME AMOUNT OF BEARER CHEQUE WAS ISSUED TO THE PARTY CONCERNED, WHICH WAS WITHDRAWN IMMEDIATELY ON WHICH HE EARNED A COMMISSION OF RS.1 50 PER RS.10,000/-. THESE FACTS HAVE NOT BEEN DISPUTED BY THE REVENUE B Y BRINGING ANY CONTRARY MATERIAL ON RECORD. IT IS ALSO A FACT THAT THE ASSESSEE HAS NOT BEEN MAINTAINING PROPER BOOKS OF ACCOUNTS. IT IS ALSO A FACT THAT THE ENTIRE CREDITS MADE IN THE BANK ACCOUNT CANNOT BE CONSIDER ED AS INCOME AND BE TAXED. IN VIEW OF THESE FACTS CIT(A) HAS HELD THAT AN APPROPRIATE METHOD TO TAX THE ASSESSEE WAS ONLY BY ESTIMATING INCOME. CIT(A) HAS ESTIMATED THE COMMISSION INCOME AT 2.5% OF THE TOTAL AMOUNTS OF CHEQUES CREDITED IN THE BANK ACCOUNT OF THE ASSESSEE. WE ARE OF THE VI EW THAT THE SUBMISSION MADE BY THE LD. D.R. THAT THE ADDITION MADE BY THE AO BE UPHELD CANNOT BE ACCEPTED IN VIEW OF THE SETTLED LAW THAT THE ENT IRE RECEIPTS CANNOT BE TREATED AS INCOME FOR THE PURPOSE OF TAXATION. EVEN THE ALTERNATIVE SUBMISSION THAT THE INCOME BE ESTIMATED AT 5% OF TH E TURNOVER AS HAS BEEN ITA NO.3149/AHD/2009 DONE UNDER THE PROVISIONS OF S. 44AF OF THE ACT, CA NNOT BE APPLIED TO THE FACTS OF THE PRESENT CASE FOR THE REASON THAT THE P ROVISIONS OF S. 44AF ARE APPLICABLE ONLY TO THE TRADERS WHOSE AGGREGATE ANNU AL TURNOVER IS LESS THAN RS.40 LACS. IN THE CASE OF THE ASSESSEE, THE CREDIT S IN THE BANK ACCOUNT ARE IN EXCESS OF RS.40 LAKHS. IT IS ALSO A FACT THAT A GAINST THE ORDER OF CIT(A), WHEREIN HE HAD ESTIMATED THE INCOME AT 2.5% OF THE TOTAL CREDITS, THE ASSESSEE HAS NOT PREFERRED ANY APPEAL BEFORE THE TR IBUNAL AND THE ASSESSEE HAS THEREFORE ACCEPTED THE ORDER OF THE CIT(A). THU S CONSIDERING THE TOTALITY OF FACTS, WE ARE OF THE VIEW THAT ON THE F ACTS AND CIRCUMSTANCES OF THE PRESENT CASE, CIT(A) HAS MADE A REASONABLE ESTI MATION AND THEREFORE NO INTERFERENCE IS CALLED FOR IN THE ORDER OF CIT(A ). WE THUS UPHOLD HIS ORDER. THUS THE GROUND OF THE REVENUE IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( . . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT ( %&'( %&'( %&'( %&'( / ANIL CHATURVEDI) )* + )* + )* + )* + /ACCOUNTANT MEMBER C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD