Madhav Soni, V. ITO,

ITA 37/LKW/2011

• Counselvise Citation: 3723714 RSA 2011
• Duration Of Justice: 3 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 26-06-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 24-01-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained investment; Assessment record
• Section: 147; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI. A. K. GARODIA , ACCOUNTANT MEMBER ITA NO S . 37 & 38/LKW/2011 ASSESSMENT YEAR S : 2004 - 05 & 2005 - 06 SHRI. MADHAV SONY PROP. M/S SONI JEWELLERS GONDA V. INCOME TAX OFFICER GONDA PAN: AYZPS2459L (APP ELL ANT) (RESPONDENT) ITA NO S . 100 & 101/LKW/2011 ASSESSMENT YEAR S : 2004 - 05 & 2005 - 06 INCOME TAX OFFICER GONDA V. SHRI. MADHAV SONY PROP. M/S SONI JEWELLERS GONDA PAN: AYZPS2459L (APP ELL ANT) (RESPONDENT) ASSESSEE BY: SHRI. RAKESH GARG, ADVOCATE RESPONDENT BY: SHRI. MANOJ KUMAR G UPTA, CIT (DR) DATE OF HEARING: 26 0 6 2014 DATE OF PRONOUNCEMENT: 25 0 7 2014 O R D E R PER SUNIL KUMAR YADAV: THESE CROSS - APPEALS ARE PREFERRED BY THE ASSESSEE AS WELL AS THE REVENUE AGAINST THE RESPECTIVE ORDER OF THE LD. CIT(A). SINCE THESE APPEALS WERE HEARD TOGETHER, THESE ARE BEING DISPOSED OF THROUGH THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2 . THE FACTS IN BRIEF BORNE OUT FROM THES E APPEALS ARE THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF SALE AND PURCHASE OF GOLD ORNAMENTS AND USED TO SELL THEM IN VILLAGE AND HAD NO SHOP IN OPERATI O N. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 2 - : ACCORDING TO HIM , GRADUALLY HIS BUSINESS GREW UP AND HIS PROFIT WAS INCREASED AND HE ACCORDIN GLY OPENED A SHOP IN THE NAME OF M/S SONI JEEWELLERS AT GONDA. UPTO FINANCIAL YEAR 2002 - 02 , THE INCOME WAS BELOW THE TAXABLE LIMIT BUT IT BECOME TAXABLE IN FINANCIAL YEAR 2002 - 03 AND HE VOLUNTARILY FILED RETURN OF INCOME FOR ASSESSMENT YEAR S 2003 - 04 AND 2004 - 05 AT RS.74,000/ - AND RS.98,940/ - RESPECTIVELY. ON RECEIPT OF INFORMATION FROM ADI (INVESTIGATION), THE ASSESSING OFFICER HAS REOPEN E D THE ASSESSMENT UNDER SECTION 147 OF THE INCOME - TAX ACT, 1961 (HEREINAFTER CALLED IN SHORT THE ACT') IN BOTH THE A SSESSMENT YEARS AND ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY HIS INCOME OF RS.14, 59,500/ - IN ASSESSMENT YEAR 2004 - 05 AND RS.10,55,700/ - IN ASSESSMENT YEAR 2005 - 06 BE NOT ADDED TO HIS RETURN OF INCOME , AS IT WAS ESCAPED FROM ASSESSMENT. 3 . ON ACCOUNT OF NON - F URNISH ING PROPER EXPLANATION , THE ASSESSING OFFICER HAS MADE ADDITION OF RS.14,59,500/ - IN ASSESSMENT YEAR 2004 - 05 AND RS.10,55,700/ - IN ASSESSMENT YEAR 2005 - 06, AGAINST WHICH APPEAL S WERE FILED BEFORE THE LD. CIT(A) AND ASSESSEE HAS EXPLAINED THE DEPOSITS OF RS.14,76,500/ - IN ASSESSMENT YEAR 2004 - 05 AND RS.10,55,700/ - IN ASSESSMENT YEAR 2005 - 06 IN THE ACCOUNT WITH DEVI PATAN KSHETRIYA GRAMI BANK. BEFORE THE LD. CIT(A), IT WAS EXPLAINED THAT THE ENTIRE SALE PROCEEDS WERE DEPOSITED IN THE BANK ACCOUNT AND F ROM TIME TO TIME IT WAS ALSO WITHDRAWN FOR PURCHASE OF JEWELLERIES AND BALANCE WAS AGAIN DEPOSITED IN THE BANK. THE LD. CIT(A) RE - EXAMINED THE EXPLANATION S OF THE ASSESSEE AND BEING CONVINCED WITH IT, HE DELETED THE ADDITION MADE IN THIS REGARD, BUT THE L D. CIT(A) SUSTAINED THE ADDITION OF RS.1,83,000/ - IN ASSESSMENT YEAR 2004 - 05 HAVING NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE WITH REGARD TO THE AVAILABILITY OF FUNDS FROM CAPITAL BALANCE AVAILABLE WITH IT ON 31.3.2003. BESIDES, THE LD. CIT(A) HAS ALSO ENHANCED THE NET PROFIT OF THE ASSESSEE AND MADE ENHANCEMENT AT RS.2,75,844/ - IN ASSESSMENT YEAR 2004 - 05 AND RS.60,975/ - IN ASSESSMENT YEAR 2005 - 06. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 3 - : 4 . AGAINST THE ADDITION CONFIRMED BY THE LD. CIT(A) AND THE ENHANCEMENT, THE ASSESSEE HAS PREFERRED APPEALS A ND AGAINST THE DELETION OF ADDITIONS ON ACCOUNT OF DEPOSITS IN BANK, THE REVENUE HAS PREFERRED APPEALS BEFORE THE TRIBUNAL. 5 . HAVING H E ARD THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF RECORD, WE FIND THAT THE ASSESSING OFFICER HAS NOT EXAMINED THE EXP LANATION OF THE ASSESSEE WITH REGA R D TO DEPOSITS IN ITS BANK ACCOUNT IN LIGHT OF EXPLANATIONS FURNISHED BY THE ASSESSEE, WHEREAS THE LD. CIT(A) HAS EXAMINED THE EXPLANATIONS WITH REGARD TO THE DEPOSITS IN THE BANK. THE ASSESSEE HAS EXPLAINED THAT SALE PRO CEEDS WERE DEPOSITED IN THE BANK , OUT OF WHICH FROM TIME TO TIME CERTAIN AMOUNTS WERE WITHDRAWN FOR PURCHASE S . SOME TIME SURPLUS WAS AGAIN DEPOSITED IN THE BANK. THE LD. CIT(A) HAS EXAMINED THE EXPLANATIONS OF THE ASSESSEE IN THIS REGARD AND BEING CONVIN CED WITH IT, HE DELETED THE ADDITION. FOR THE SAKE OF REFERENCE, WE EXTRACT THE FINDINGS OF THE LD. CIT(A) WITH REGARD TO THE DELETION OF ADDITION ON ACCOUNT OF DEPOSITS IN BANK FOR ASSESSMENT YEAR 2004 - 05 AS UNDER: - 5.1 I HAVE GONE THROUGH THE CONTEN TIONS OF APPELLANT, SUBMISSIONS MADE DURING THE APPELLANT PROCEEDINGS, REMAND REPORTS OF ASSESSING OFFICER AND FACTS OF CASE. IT IS TRUE THAT THE APPELLANT HAS NOT FILED TRADING & P&L ACCOUNT AND BALANCE SHEET OF THE A.Y. 2043 - 05 ALONG WITH HIS RETURN OF I NCOME AND EVEN DURING THE ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER IS GIVEN AN OPPORTUNITY TO SUBMIT REPORT AFTER EXAMINING THE AFORESAID MATERIALS/EVIDENCE BY FORWARDING THE SAME TO HIM. HOWEVER, THE CONTENTIONS OF APPELLANT THAT HE IS MA INTAINING BOOKS OF ACCOUNT FOR HIS BUSINESS ARE NOT FOUND CORRECT. THE SAID 'ROZNAMACHA' CANNOT BE CONSIDERED AS COMPLETE SET OF BOOKS OF ACCOUNT. FURTHER, THE PHOTOCOPY OF SAID 'ROZNAMACHA' PLACED IN THE ASSESSMENT RECORD, IS NOT FOUND TALLYING WITH ALL T HE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 4 - : ENTRIES OF HIS BANK ACCOUNT. THUS, THE APPELLANT'S CASE IS CLEARLY A CASE WHERE NO BOOKS OF ACCOUNT HAVE BEEN MAINTAINED. 5.2 AS REGARDS, THE ADDITION OF RS. 12,76,500/ - , THE APPELLANT HAS FILED THE PHOTOCOPY OF HIS BANK ACCOUNT (SB A/C NO. 6747) WITH D EVI PATAN KSHETRIYA GRAMIN BANK CHOWK, GONDA, DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE TOTAL CASH DEPOSITS MADE IN THIS BANK ACCOUNT DURING THE FINANCIAL YEAR 2003 - 04 RELEVANT TO A.Y.2004 - 05 COME TO RS.23,32,500/ - WHEREAS THE TOTAL WITHDRAWALS COME TO RS.17,63,400/ - . THE ASSESSING OFFICER HAS ONLY TREATED THE DEPOSITS OF RS.12,76,500/ - AS UNEXPLAINED DEPOSITS. EVEN, IN HIS REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER IN RESPECT OF AFORESAID SUBMISSIONS OF APPELLANT HAS REITERATED THAT THE DEPOSI TS OF RS. 12,76,500/ - HAVE NOT BEEN FOUND EXPLAINED BY THE APPELLANT. IN OTHER WORDS, THE ASSESSING OFFICER HAS TREATED THE OTHER CASH DEPOSITS OF APPELLANT AS EXPLAINED. THUS, THE SUBMISSIONS OF APPELLANT ARE HAVING FORCE IN REGARD AS TO WHY THE ASSESSING OFFICER HAS TREATED ONLY THE AFORESAID DEPOSITS OF RS. 12,76,500/ - AS UNEXPLAINED. IT SHOWS THAT THE ASSESSING OFFICER HAS NOT MADE PROPER ENQUIRY AND HAS NOT GATHERED ANY COGENT EVIDENCE/MATERIAL BEFORE ADDING THE AMOUNT OF RS. 12,76,500/ - . FURTHER THE A SSESSING OFFICER HAS ACCEPTED THE VERSION OF APPELLANT THAT HE IS DOING THE BUSINESS OF SALE & PURCHASE OF JEWELLERY. AS REGARDS UNEXPLAINED INVESTMENT OF RS.1,83,000/ - MADE SE OF HOUSE, THE FINDINGS ARE BEING GIVEN SEPARATELY. 5.3. UNDER THESE FACTS AND C IRCUMSTANCES, IT IS AMPLY CLEAR THAT THE ADDITION OF RS.12,76,500/ - HAS BEEN MADE BY THE ASSESSING OFFICER WITHOUT MAKING PROPER ENQUIRY AND WITHOUT ANY COGENT REASON. THEREFORE, THE GROUND NO. 5 OF APPELLANT SUCCEED' SUBJECT TO THE FINDING IN RESPECT OF U NEXPLAINED INVESTMENT OF RS. 1,83,000/ - , AND ACCORDINGLY THE ADDITION MADE OF RS.12,76,500/ - IS HEREBY DELETED. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 5 - : 6 . FOR THE SIMILAR REASON, THE ADDITION OF RS.10,55,700/ - IN ASSESSMENT YEAR 2005 - 06 WAS ALSO DELETED. 7 . THE LD. D.R. COULD NOT POINT OUT ANY DEF ECT IN THE ORDERS OF THE LD. CIT(A). ON A CAREFUL PERUSAL OF THE ORDERS OF THE LD. CIT(A), WE FIND THAT THE LD. CIT(A) HAS TAKEN INTO ACCOUNT DIFFERENT ENTRIES OF WITHDRAWAL AND DEPOSITS AS EXPLAINED BY THE ASSESSEE IN PARA 5 OF THE ORDER OF THE LD. CIT(A ). THE ASSESSEE HAS ALSO GIVEN VARIOUS DATES ALONG WITH DEPOSITS. HAVING CAREFULLY EXAMINED THE DETAILS FURNISHED BY THE ASSESSEE AND THE FINDINGS OF THE LD. CIT(A), WE ARE OF THE VIEW THAT THE LD. CIT(A) HAS PROPERLY APPRECIATED THE EXPLANATIONS OF THE ASSESSEE WHILE DELETING THE ADDITION. ACCORDINGLY, WE CONFIRM THE ORDER OF THE LD. CIT(A) ON THIS ISSUE HAVING FIND NO MERIT IN THE REVENEUS CONTENTIONS IN THIS REGARD IN BOTH THE APPEALS. 8 . SO FAR AS ADDITION OF RS.1.83 LAKHS CONFIRMED BY THE LD. CIT(A) I N ASSESSMENT YEAR 2004 - 05 IS CONCERNED, WE FIND THAT THE ASSESSEE HAS EXPLAINED THAT THIS CASH OF RS.1.83 LAKHS WAS AVAILABLE OUT OF CAPITAL BALANCE OF RS.2,75,844/ - ACCUMULAT E D OVER A NUMBER OF YEARS SINCE COMMENCEMENT OF ITS ACTIVITIES OF TRADING IN JEWE LLERIES, THOUGH HE HAS NOT PREPARED REGULAR BOOKS OF ACCOUNT OR HAS FILED RETURN OF INCOME, AS INCOME WAS BELOW THE TAXABLE LIMIT. THE LD. CIT(A) HAS NOT APPRECIATED THIS EXPLANATION OF THE ASSESSEE AND HE MADE ADDITION THEREOF. SINCE THE ASSESSEE HAS FU RNISHED DETAILS AND THERE IS NO VALID REASON TO DOUBT THE OPENING BALANCE OF RS.2,75,844/ - AS ON 31.3.2003 ACCUMULATED OVER A PERIOD OF YEARS ON ACCOUNT OF PROFIT ACCRUED IN ITS BUSINESS, WE FIND NO MERIT IN THIS ADDITION OF RS.1.83 LAKHS SUSTAINED BY THE LD. CIT(A). ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DELETE TH E SAME. 9 . THE NEXT ISSUE IN THE ASSESSEES APPEAL IS WITH REGARD TO THE ENHANCEMENT OF INCOME. THE LD. COUNSEL FOR THE ASSESSEE HAS STATED THAT PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 6 - : THE LD. CIT(A) HAS ENHANCED THE I NCOME HAVING INVOKED THE PROVISIONS OF SECTION 44AF OF THE ACT AND ESTIMATED THE SALES @ 20% OF THE TOTAL SALES, WHEREAS THE ASSESSEE HIMSELF HAS WORKED OUT PROFIT @ 5.08% ON TOTAL SALE OF RS.14,57,268/ - IN ASSESSMENT YEAR 2004 - 05. WE HAVE ALSO CAREFULLY EXAMINED THE PROVISIONS OF SECTION 44AF OF THE ACT AND WE DO NOT FIND ANY WHERE IN THIS SECTION WHICH REFERS THE NET PROFIT @ 20% IS REQUIRED TO BE ADOPTED IN CASE OF RETAIL BUSINESS. AS PER S ECTION 44AF OF THE ACT , WHEN AN ASSESSEE DOES NOT MAINTAIN S THE BOOKS OF ACCOUNT AND IS ENGAGED IN RETAIL BUSINESS, PROFIT IS TO BE ESTIMATED @ 5% OF THE TOTAL TURNOVER , WHICH IN THIS CASE HAS BEEN DONE BY THE ASSESSEE HIMSELF. THEREFORE, WE FIND NO MERIT IN THE ENHANCEMENT MADE BY THE LD. CIT(A). ACCORDINGLY, WE DEL ETE THE ADDITION MADE ON ACCOUNT OF ENHANCEMENT IN ASSESSMENT YEAR 2004 - 05 AT RS.2,17,454/ - AND IN ASSESSMENT YEAR 2005 - 06 AT RS.60,975/ - . ACCORDINGLY THESE APPEALS ARE DISPOSED OF. 10 . IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLOWED AND THAT OF THE REVENU E ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25.7.2014. SD/ - SD/ - [ A. K. GARODIA ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 25 TH JU LY , 2014 JJ: 1607 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REG ISTRAR PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ )