Shri Narendrakumar Bhupendrabhai Patel, Mehsana V. The Income Tax Officer, Ward-2, Now Ward-4, Patan

ITA 3320/AHD/2015

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1345 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 09-08-2019
• Assessment Year: 2011-2012
• Appeal Filed On: 01-12-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIRENDER SINGH
• Assessee Lawyers: H V DOSHI
• Keywords: Presumptive income; Peak credit
• Section: 44AD; 143(3)

Judgement Text

, SMC IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NO. 3320/AHD/2015 ( ASSESSMENT YEAR : 2011-12) SHRI NARENDRAKUMAR BHUPENDRABHAI PATEL PROP. OF NOKIA ELECTRONICS 23-24, MUNICIPAL MARKET, NR. UNJHA PHARMACY, STATION ROAD, UNJHA - 384170 / VS. ITO WARD 2 (NOW WARD-4), PATAN ./ ./ PAN/GIR NO. : ACYPP9591M ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI H. V. DOSHI, A.R. / RESPONDENT BY : SHRI VIRENDER SINGH, SR.DR DATE OF HEARING 09/08/2019 !'# / DATE OF PRONOUNCEMENT 11/09/2019 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), GANDHINAGAR (CIT(A) IN SHORT), DATED 26.10.2015 A RISING IN THE ASSESSMENT ORDER DATED 31.12.2013 PASSED BY THE ASS ESSING OFFICER (AO) ITA NO. 3320/AHD/15 [NARENDRAKUMAR B. PATEL VS. ITO] A.Y. 2011-12 - 2 - UNDER S. 143(3) OF THE INCOME TAX ACT, 1961 (THE AC T) CONCERNING AY 2011-12. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE REA D AS UNDER: 1. LEARNED CIT (A) HAS ERRED IN LAW & FACTS IN CON FIRMING ADDITION OF RS. 2,11,513/- MADE BY A.O. IN RESPECT OF NEGATIVE DIFFERENCES IN CLOSING BANK BALANCES IN MARKET YARD COMMERCIAL CO- OP, BANK AND BALANCES SHEET IN CONSEQUENCE OF DEBIT BALANCE (NEG ATIVE BALANCE) IN BANK STATEMENT. 2. LEARNED CIT (A) HAS ERRED IN LAW & FACTS BY CON FIRMING ADDITION OF RS. 20,618/- MADE BY A.O.IN RESPECT OF DIFFERENCES IN CLOSING BALANCES IN ORIENTAL BANK OF COMMERCE CURRENT ACCOU NTS. 3. LEARNED CIT (A) HAS ERRED IN LAW & FACTS BY CONF IRMING ADDITION OF RS. 6,80,000/- MADE BY A.O. IN RESPECT OF PEAK BALA NCES OF CASH DEPOSIT IN SAVING BANK ACCOUNT OF ORIENTAL BANK OF COMMERCE ON THE BASIS OF REMAND REPORT OF A.O AND ERRED BY NOT CONSIDERING THE FACTS IN PERSONAL BOOKS OF ACCOUNTS PRODUCED AS ADD ITIONAL EVIDENCE. 4. LEARNED CIT (A) HAS ERRED IN LAW & FACTS BY CONF IRMING ADDITION OF RS. 6,10,000/- MADE BY A.O. IN RESPECT OF WRONGLY C OMPUTED PEAK BALANCES OF CURRENT ACCOUNT OF ORIENTAL BANK OF COM MERCE ON THE BASIS OF REMAND REPORT OF A.O AND ERRED BY NOT CONS IDERING THE FACTS IN PERSONAL BOOKS OF ACCOUNTS PRODUCED AS ADD ITIONAL EVIDENCE. 3. THE ASSESSEE, A PROPRIETOR OF NOKIA ELECTRONICS, FILED HIS RETURN OF INCOME FOR AY 2011-12 DECLARING TOTAL INCOME OF RS. 1,64,460/-. THE RETURN FILED BY THE ASSESSEE WAS SUBJECTED TO SCRUT INY ASSESSMENT. IN THE COURSE OF SCRUTINY ASSESSMENT, THE AO OBSERVED THAT CLOSING BANK BALANCE IN THE BALANCE SHEET OF NOKIA ELECTRONICS DID NOT M ATCH WITH THE CLOSING BALANCE IN THE VARIOUS BANK STATEMENTS OF THE PROPR IETARY CONCERN. THE AO FOUND DIFFERENCE OF RS.20,618/- IN THE BANK BALANCE OF ORIENTAL BANK OF COMMERCE (OBC) AND RS.2,11,513/- IN MARKET YARD COM MERCIAL CO- OPERATIVE BANK. THE AO ALSO FOUND THAT CERTAIN CAS H DEPOSITS AMOUNTING TO RS.6,80,000/- IN THE SAVING BANK ACCOUNT OF OBC IN INDIVIDUAL NAME AND RS.6,10,000/- IN CURRENT ACCOUNT OF OBC. THE AO DI D NOT FIND THE EXPLANATION TOWARDS SUCH DIFFERENCES AND DEPOSITS T O BE SATISFACTORY AND ACCORDINGLY ADDED THE AGGREGATE AMOUNT OF RS.15,22, 231/- ON ACCOUNT OF SUCH DIFFERENCES AND DEPOSITS. ITA NO. 3320/AHD/15 [NARENDRAKUMAR B. PATEL VS. ITO] A.Y. 2011-12 - 3 - 4. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) WITHOUT ANY SUCCESS. 5. FURTHER AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS ON THE RECON CILIATION OF DIFFERENCES IN THE BANK ACCOUNT AND UNEXPLAINED CAS H DEPOSITS. AS POINTED OUT ON BEHALF OF THE ASSESSEE, WE NOTE THAT ASSESSE E IS A SMALL TRADER OF ELECTRONICS ITEMS. THE BALANCE SHEET SUBMITTED IN THE COURSE OF ASSESSMENT PROCEEDINGS WERE BASED ON INCOMPLETE ACCOUNTS AND A DMITTEDLY MANY BANK TRANSACTIONS WERE NOT INCORPORATED RESULTING IN REC ONCILIATION DIFFERENCES. THE ASSESSEE IS STATED TO HAVE RECAST THE BOOKS OF ACCOUNTS INCORPORATING ALL THE ENTRIES AND FILED THE SAME BEFORE THE REVEN UE AUTHORITIES. ACCORDING TO THE NEWLY CONSTRUCTED BALANCE SHEET (P LACED IN PAPER BOOK), THE CAPITAL ACCOUNT OF THE ASSESSEE STANDS AT A MEA GER AMOUNT OF RS.1,65,010/- ONLY. THE TOTAL RESOURCES INCLUDING THE LIABILITY STANDS AT RS.3,80,330/-. THE ASSESSEE HAS CLAIMED THAT IT IS ENGAGED IN THE FRINGE BUSINESS OF PURCHASE AND SALE OF OLD TELEVISION SET S AND THE AMOUNT DEPOSITED HAVE BEEN REGULARLY WITHDRAWN FROM TIME-T O-TIME AND RECYCLED IN THE BUSINESS. THE AFORESAID SUBMISSION OF THE ASSE SSEE APPEARS CORRECT FROM THE SUMMERY OF THE CASH STATEMENT SHOWING DEPO SITS AND WITHDRAWALS IN THE BANK. THE DIFFERENCES IN THE BANK STATEMENT HAS BEEN ALSO RECONCILED BEFORE THE CIT(A). THE ASSESSEE HAS ALSO POINTED O UT SUCH FACTS TO THE AO IN THE REMAND PROCEEDINGS. HAVING REGARD TO THE ME AGER TURNOVER OF LESS THAN RS.40 LAKHS, THE ASSESSEE IS NOT EXPECTED TO M AINTAIN REGULAR BOOKS OF ACCOUNTS UNDER THE PRESUMPTIVE TAXATION SCHEME PRES CRIBED IN SECTION 44AD OF THE ACT. IT IS ALSO NOTICED THAT ASSESSEE CLAIMS TO HAVE SUBMITTED COPY OF SALES REGISTER, PURCHASE REGISTER AND QUANT ITATIVE DETAILS BEFORE THE CIT(A). IN SUCH CIRCUMSTANCES AND HAVING REGARD TO THE SMALLNESS OF THE TRANSACTION, THE EXPLANATION OFFERED BY THE ASSESSE E IS CONSIDERED TO BE BROADLY SATISFACTORY. THEREFORE, THE ADDITION ON A CCOUNT OF RECONCILIATION DIFFERENCES AMOUNTING TO RS.2,11,513/- AND RS.20,61 8/- STANDS DELETED. AS REGARDS CASH DEPOSITS OF RS.6,80,000/- AND RS.6,10, 000/-, WE DIRECT THE AO TO ESTIMATE INCOME APPLYING 5% THEREON IN TUNE WITH SECTION 44AF OF THE ITA NO. 3320/AHD/15 [NARENDRAKUMAR B. PATEL VS. ITO] A.Y. 2011-12 - 4 - ACT. THE ADDITION OF RS.64,500/- IS THUS SUSTAINED AND REMAINING ADDITION STANDS DELETED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. SD/- SD/- (RAJPAL YADAV) (PRADIP K UMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 11/09/2019 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 11/09/20 19