KISHIN GOBIND WADHWANI , ULHASNAGAR V. ITO ,WD- 2(2), KALYAN

ITA 3312/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1263 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 17-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H , BENCH MUMBAI BEFORE SHRI MAHAVIR SINGH , JM & SHRI M.BALAGANESH, AM ITA NO. 3312 /MUM/201 8 ( ASSESSMENT YEAR : 2014 - 15 ) SHRI KISHAN GOBIND WADHWANI FLAT NO.402, MATHURA PARK APARTMENT, GANDHI ROAD ULHASNAGAR 421 005 VS. INCOME TAX OFFICE WARD 2(2), MOHAN PLAZA WAYALE NAGAR KHADAKPADA KALYAN (W) PAN/GIR NO. ABJPW4587G (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY SHRI GAURAV BANSAL REVENUE BY SHRI MANOJ KUMAR SINGH DATE OF HEARING 27 / 08 /2019 DATE O F PRONOUNCEMENT 04 / 09 /2019 / O R D E R PER M. BALAGANESH (A.M) : THIS APPEAL IN ITA NO. 3312/MUM/2018 FOR A.Y. 2014 - 15 ARISES OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 3, THANE IN APPEAL NO. 10701 - THN/16 - 17 DATED 28 /03/2018 (LD. CIT(A) IN SHORT) AGAINST THE ORDER OF ASSESSMENT PASSED U/S.143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) DATED 29/12/2016 BY THE LD. INCOME TAX OFFICER, WARD 2(2), KALYAN (HEREINAFTER REFERRED TO AS LD. AO). 2. THE ONL Y ISSUE INVOLVED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN DETERMINING THE PROFIT AT 10% OF THE TOTAL TURN OVER OF THE DEPOSITS IN UNDISCLOSED BANK ACCOUNTS OF THE ASSESSEE. ITA NO.3312/MUM/2018 SHRI KISHIN GOBIND WADHWANI 2 3. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSESSEE IS ST ATED TO BE ENGAGED IN THE BUSINESS OF TRADING OF TEXTILE ACTIVITY. THE ASSESSEE HAD FILED ITS RETURN OF INCOME FOR THE A.Y.2014 - 15 ON 22/11/2014 DECLARING TOTAL INCOME OF RS.5,71,108/ - . THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD DECLARED GROSS PR OFIT OF RS.11,21,136/ - WHICH WORKED OUT TO 4.06% AND GROSS SALES OF RS.2,76,33,625/ - . THE ASSESSEE HAD REPORTED BUSINESS INCOME OF RS.6,81,805/ - IN THE RETURN OF INCOME FILED BY HIM. 3.1. THE LD. AO OBSERVED THAT DURING THE YEAR UNDER CONSIDERATION, THERE ARE AGGREGATE CASH AND CHEQUE DEPOSITS TO THE TUNE OF RS.10,81,38,204/ - IN THE BANK ACCOUNT OF THE ASSESSEE MAINTAINED WITH ICICI BANK. THE SAID BANK ACCOUNT REMAINED UNDISCLOSED BY THE ASSESSEE IN ITS ACCOUNTS AND IN THE RETURN OF INCOME FILED. THE LD. A O IN THE ABSENCE OF SATISFACTORY EXPLANATION AFFORDED BY THE ASSESSEE WITH REGARD TO THE UNDISCLOSED BANK ACCOUNT, ACCEPTED TO THE FACT THAT THOSE DEPOSITS REPRESENT BUSINESS RECEIPTS OF THE ASSESSEE FROM ITS REGULAR TRADING ACTIVITY AND ACCORDINGLY , PROCE EDED TO TREAT THE ENTIRE DEPOSITS AS UNDISCLOSED TURNOVER OF THE ASSESSEE AND PROCEEDED TO BRING TO TAX THE GROSS PROFIT THEREON. FOR THIS PURPOSE, THE LD. AO ADOPTED THE SAME GROSS PROFIT RATE OF 4.06% AS DECLARED BY THE ASSESSEE IN HIS RETURN OF INCOME. IN THIS MANNER, THE LD. AO MADE ADDITION OF RS.43,90,411/ - IN THE ASSESSMENT. BEFORE THE LD. CIT(A), THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE TOOK A DIFFERENT STAND STATING THAT THE ASSESSEE WAS ENGAGED IN CHEQUE / BILL DISCOUNTING BUSINESS ALSO AND T HOUGH THE TRANSACTION IN THE UNDISCLOSED BANK ACCOUNT WITH ICICI BANK REPRESENTED ONLY THOSE CHEQUE / BILL DISCOUNTING TRANSACTIONS AND THAT THE ASSESSEE HAD DERIVED COMMISSION INCOME FROM THOSE TRANSACTIONS AT 0 .1 0 % OF THE TOTAL VALUE OF TRANSACTIONS. AC CORDINGLY, THE ONLY COMMISSION INCOME AT 0 .1 0 % COULD BE ITA NO.3312/MUM/2018 SHRI KISHIN GOBIND WADHWANI 3 BROUGHT TO TAX IN THE OPINION OF AUTHORISED REPRESENTATIVE OF THE ASSESSEE. THIS CLAIM WAS MADE FOR THE FIRST TIME BEFORE THE LD. CIT(A). IN SUPPORT OF THE CONTENTIONS OF THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE, THE ASSESSEE PRODUCED EVIDENCES IN RESPECT OF DECLARATION MADE UNDER INCOME DECLARATION SCHEME (IDS) 2016 FOR A.YRS.2013 - 14, 2015 - 16 AND 2016 - 17 WHEREIN COMMISSION INCOME ON CHEQUE DISCOUNTING BUSINESS WAS OFFERED IN THE SUM OF RS.20 LAKH S, 25 LAKHS AND RS.15 LAKHS RESPECTIVELY. IT WAS PLEADED THAT THIS DE CLARATION ITSELF GOES TO PROVE THAT ASSESSEE WAS INDEED ENGAGED IN CHEQUE DISCOUNTING BUSINESS AND THAT EVEN FOR A.Y.2014 - 15, SAME NEEDS TO BE TAXED AT 0 .1 0 % WHICH HAS ALREADY BEEN ACCEPT ED BY THE DEPARTMENT UNDER IDC 2016 FOR PRECEDING AND SUBSEQUENT YEARS. THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE VIDE LETTER DATED 26/03/2018 HAD AGREED TO FOR A GROSS PROFIT AT 6% OF TOTAL OF CASH / CHEQUES DEPOSIT IN THE SAID UNDISCLOSED BANK ACCOUN TS OF RS.10,81,38,204/ - . ACCORDINGLY, THE LD. CIT(A) DETERMINED THE GROSS PROFIT OF THE ASSESSEE AT 10% OF TOTAL DEPOSITS WITH ICICI BANK INCLUDING THE ADDITION AT 4% MADE BY THE LD AO. IN THIS, THE LD. CIT(A) ALSO OBSERVED THAT THE TOTAL OF CASH DEPOSITS AND CHEQUE DEPOSITS WORKED OUT TO RS.11,03,20,184/ - INSTEAD OF RS. 10,81,38,204/ - C ONSIDERED BY THE LD. AO. ACCORDINGLY, THE LD. CIT(A) DETERMINED THE GROSS PROFIT AT 10% OF RS.11,03,20,184/ - AND DETERMINED THE PROFIT AT RS.1,10,32,018/ - LESS RS. 43,90,411/ - ALREADY ESTIMATED BY THE LD. AO AND MADE AN ENHANCED ADDITION OF RS.66,41,607/ - AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 4. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD RIVAL SUBMISSIONS. THOUGH THE ASSESSEE HAS RAISE D SEVERAL GROUNDS BEFORE US, WE FIND ULTIMATELY THE MOOT ISSUE IS THAT WITH ITA NO.3312/MUM/2018 SHRI KISHIN GOBIND WADHWANI 4 REGARD TO DETERMINING THE GROSS PROFIT OF THE ASSESSEE. THE LD. AR VEHEMENTLY ARGUED BEFORE US THAT THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE WAS NOT AUTHORISED BY THE ASSESSEE TO FILE A LETTER ACCEPTING FOR DETERMINATION OF GROSS PROFIT AT 10% BEFORE THE LD. CIT(A). IN SUPPORT OF THIS, THE LD. AR PLACED ON RECORD THE AFFIDAVIT FILED BY THE ASSESSEE. IN THE SAID AFFIDAVIT THE ASSESSEE HAD SPECIFICALLY PLEADED THAT THE SAID CONCE SSION WAS GIVEN BY HIS AUTHORISED REPRESENTATIVE WITHOUT HIS CONSENT AND WITHOUT INFORMING THE SAME TO HIM. CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES, WE ARE INCLINED TO REJECT THE CONCESSION GIVEN BY THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE BEFORE THE LD. CIT(A ) ACCEPTING FOR DETERMINATION OF GROSS PROFIT AT 10% OF TOTAL DEPOSITS IN THE UNDISCLOSED BANK ACCOUNT WITH ICICI BANK. IT IS NOT IN DISPUTE THAT THE ASSESSEE IN THE PRECEDING AND IN SUBSEQUENT ASSESSMENT YEARS HAD INDEED FILED A DECLA RATION UNDER IDS 2016 SCHEME OFFERING COMMISSION INCOME FROM CHEQUE DISCOUNTING BUSINESS. THIS DECLARATION HAS BEEN ACCEPTED BY THE REVENUE AND THE RELEVANT CERTIFICATE HAS BEEN ISSUED BY THE PRINCIPAL COMMISSIONER OF INCOME TAX IN THIS REGARD. HENCE IT IS CONCLUSIVELY PROVED THAT THE ASSESSEE IS INDEED ENGAGED IN CHEQUE DISCOUNTING BUSINESS DURING THE YEAR ALSO WHICH IS IN CONSONANCE WITH THE DECLARATION MADE IN IDS 2016 FOR PRECEDING AND SUBSEQUENT ASSESSMENT YEARS. WE FIND IN THE FACTS AND CIRCUMSTANCE S OF THE INSTANT CASE, THE LD. AO HAVING ACCEPTED TO THE FACT THAT THE TRANSACTIONS IN THE SAID UNDISCLOSED BANK ACCOUNT REPRESENTING REGULAR BUSINESS TRANSACTIONS CARRIED OUT BY THE ASSESSEE , WHEREAS THE ASSESSEE HAD CLAIMED THAT THEY REPRESENT CHEQUE DIS COUNTING BUSINESS TRANSACTIONS. HENCE IT COULD BE CONCLUDED THAT THE SAID UNDISCLOSED BANK ACCOUNT CONTAINS BOTH TEXTILE BUSINESS TRANSACTIONS AS WELL AS CHEQUE DISCOUNTING TRANSACTIONS. CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT THE ADOPTION OF PROFIT RATE OF 2% ON THE REVISED TOTAL DEPOSITS FIGURE ITA NO.3312/MUM/2018 SHRI KISHIN GOBIND WADHWANI 5 OF RS.11,03,20,184/ - BEING THE TOTAL OF CASH AND CHEQUE DEPOSITS IN UNDISCLOSED ICIC I BANK ACCOUNT, WOULD MEET THE END S OF JUSTICE. ACCORDINGLY, THE GROUNDS RAISED BY THE ASS ESSEE ARE PARTLY ALLOWED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 04 / 09 /201 9 SD/ - ( MAHAVIR SINGH ) SD/ - (M.BALAGANESH) JUDICIAL MEMBER AC COUNTANT MEMBER MUMBAI ; DATED 04 / 09 / 2019 KARUNA , SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//