The Income-tax Officer, Amritsar. V. Sh Ajit Singh, Amritsar.

ITA 391/ASR/2011

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3279 (ITAT-AMRITSAR)
• Duration Of Justice: 7 year(s) 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 12-02-2019
• Assessment Year: 2007-2008
• Appeal Filed On: 24-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHAWANI SHANKAR
• Keywords: Unexplained investment; Business income; Peak credit

Judgement Text

IN THE INCOME TAX APPELLATE T RIBUNAL AMRITSAR BENCH, AMR ITSAR BEFORE SH. N.S.SAINI, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER ITA NO.391(ASR)/2011 ASSESSMENT YEAR:2007-0 8 INCOME TAX OFFICER, WARD-3(1), AMRITSAR. VS. SH. AJIT SINGH, PROP. M/S PAUL AUTO SPARES, KOT ATMA SINGH ROAD, AMRITSAR. [PAN:ACFPS 9177B] (APPELLANT) (RESPONDENT) APPELLANT BY: SH. BHAWANI SHANKAR (LD. DR) RESPONDENT BY: NONE DATE OF HEARING: 12.02.2019 DATE OF PRONOUNCEMENT: 14.02.2019 ORDER PER N.K.CHOUDHRY, JM: THIS IS AN APPEAL FILED BY THE REVENUE DEPARTMENT AG AINST THE ORDER DATED 03.05.2011 PASSED BY THE LD. CIT(A), AMRITSAR, U /S 250(6) OF THE I.T. ACT, 1961 (HEREINAFTER CALLED AS THE ACT). 2. THE REVENUE DEPARTMENT HAS RAISED THE FOLLOWING GROUN DS OF APPEAL. 1. THE LD. CIT(APPEALS) ERRED IN ADMITTING AND APP LYING NET PROFIT RATE OF 5% ON THE ADMITTED BANK PEAK OF RS.2 8,24,937/- IN ALL THE FIVE BANK ACCOUNTS ON THE BASIS OF WORKING OF APPELLANT. 2. THE LD. CIT (APPEALS) ERRED IN ACCEPTING THE PEA K CREDIT OF RS.28,24,937/- ON THE WORKING OF THE APPELLANT AS T HE ASSESSEE HAS NOT FILED ANY DECLARATION FOR DIVISION OF TOTAL CREDITS AS WAS ALLOWED LAST YEAR BY ANOTHER ASSESSING OFFICER WHO HAS ACCEPTED THE SHARE OF THE APPELLANT OF RS.29,97,966/- OUT OF TOTAL CREDITS OF RS.62,31,999/-. ASSESSING OFFICER HAS RIGHTLY ADDED THE WHOLE ITA NO.391/ASR/2011 (A.Y.2007-08) ITO VS. SH. AJIT SINGH 2 AMOUNT OF CREDIT OF RS.70,07,814/- IN THE INDIVIDUA L CASE OF THE APPELLANT. 3. THE LD. CIT (APPEALS) ERRED IN ACCEPTING THE ASSESSEES CONTENTION THAT UNEXPLAINED INCOME FOR THE CURRENT YEAR IS NOT TO BE TAXED AS THE LAST YEARS UNEXPLAINED INCOME STAN DS ALREADY BEEN TAXED. EACH ASSESSMENT YEAR IS A SEPARATE CONT EXT. 3. AN APPLICATION FOR ADJOURNMENT HAS BEEN FILED ON BEH ALF OF THE ASSESSEE. AS THE APPEAL RELATES TO THE YEAR 2011 AND ALMO ST NINE YEARS HAVE BEEN PASSED BUT STILL AR IN PROCESS OF GETTING THE REQUIR ED DOCUMENTS AND FILES FROM THE ASSESSEE AS PER REASON FOR ADJOURNMENT, T HEREFORE CONSIDERING THE APPEAL BEING VERY OLD PENDING SINCE 2011 FOR ADJ UDICATION WE CONSIDER IT PROPER NOT TO ADJOURN THE APPEAL HENCE THE APPLICATIO N FILED BY THE ASSESSEE STANDS REJECTED. 4. THE REVENUE DEPARTMENT CHALLENGED THE ORDER ON SOLE GROUND WHICH RELATES TO THE APPLYING OF NET PROFIT RATE @ 5% ON T HE ADMITTED BANK PEAK CREDIT OF RS.28,24,937/- IN ALL THE FIVE BANK ACCOUNTS M AINTAINED BY THE ASSESSEE, ON THE BASIS OF WORKING OF ASSESSEE. FOR THE SAKE OF BREVITY AND COMPLETENESS THE ADJUDICATION PART QUA ISSUE IN HAND IS RE PRODUCED HEREIN BELOW. 6. I HAVE CAREFULLY CONSIDERED THE APPELLANTS WR ITTEN SUBMISSIONS INCLUDING ME CASE LAWS RELIED UPON AS WELL AS GONE THROUGH THE A.O.S ASSESSMENT ORDER. IT IS AN ADMITTED FACT THAT IT IS A NO ACCOUNT CASE WHERE NEITHER PROPER BOOKS OF ACCOUNTS HAVE BEEN MAINTAIN ED NOR FURNISHED/PRODUCED BEFORE THE A.O. IT IS ALSO AN UN DENYING FACT THAT THE DEPARTMENT HAS DEDUCTED FRESH DEPOSITS TO THE TUNE OF RS.70,07,814 /- LYING RECORDED/TRANSACTED DURING THE PREVIOUS YEAR RELEVA NT TO THE ASSESSMENT YEAR UNDER CONSIDERATION I.E. 2007-08. ON THE OTHER HAND THE ID. A/R FOR THE APPELLANT HAS VEHEMENTLY CONTENDED VIDE HIS REPLY D T. 8.12.09 THAT CASH DEPOSITS OF RS.17,85,000 IN P&SB CA A/C. NO.915 AND RS.30,65,860/-FOUND IN ACCOUNT NO.40058 IN P&SB, SSSS KHALSA SCHOOL, AMRIT SAR ARE THE SAME WHICH HAVE ALREADY BEEN SURRENDERED AND OFFERED FOR TAXATION FOR THE LAST ASST. YEAR 2006-07 AND PROPORTIONATELY ASSESSED BY THE DEPARTMENT BY ALLOWING THE BENEFIT OF PEAK CREDIT IN THE HANDS OF FOUR-CO-OWNERS, INCLUDING M RESPECT OF A SUM OF RS.29,97,966/-ONLY IN THE HAN DS OF THE APPELLANT. IT IS ALSO AN ADMITTED FACTS THAT THE APPELLANTS LINE OF BUSINESS AND MODUS OPERANDI REMAINED THE SAME INDULGING IN MAKING HUGE CASH UNEXPLAINED ITA NO.391/ASR/2011 (A.Y.2007-08) ITO VS. SH. AJIT SINGH 3 INVESTMENTS IN REAL ESTATE BUSINESS SO AS TO DERIVE HIGH MARGIN OF PROFITS THEREFROM. THE APPELLANT HAS FAILED TO PRODUCE ALLE GED FARMERS FOR AND ON BEHALF OF WHOM HE IS ALLEGED TO BE ACTING AS PROPER TY COMMISSION AGENT AND THIS FACT IS FURTHER GOT STRENGTHENED FROM THE STAT EMENT OF ONE OF THE SUCH NAME-LENDER VIZ. S.AJIT SINGH WHOSE STATEMENT DATED 18.12.2009 WAS ALSO RECORDED AND WHO HAS CONFIRMED TO HAVE MADE CASH AD VANCE OF RS.4 LACS AND IN LIEU OF THIS NEITHER THE MONEY WAS RETURNED NOR THE DEAL REMAINED MATURED THROUGHOUT THE PREVIOUS YEAR RELEVANT TO TH E ASSESSMENT YEAR UNDER CONSIDERATION. FURTHER, THE APPELLANT HAS NOT COOPERATED WITH THE DEPARTMENT IN FURNISHING FULL DETAILS GIVING THEREI N NAME, COMPLETE ADDRESS/IDENTITY OF THE CASH DEPOSITORS/FARMERS SO AS TO CO-RELATE THE CASH DEPOSITS ENTERTAINED AND REPAYMENTS, IF ANY MADE TH ERE AGAINST AND OR FURNISHING THE CERTIFIED COPIES OF THE INSTRUMENTS OF SALES OF PROPERTIES GOT EXECUTED BY THE SO-CALLED, ASPIRANT VENDORS AND VEN DEES. OTHERWISE, THE APPELLANTS STATEMENT OF AFFAIRS ARE LIABLE TO BE T REATED NOTHING BUT A SHAM DEVICE AND GESTURE OF REVOLVING HIS OWN UNEXPLAINED INVESTMENTS FOUND RECORDED ENTERED/RECORDED IN HIS VARIOUS BANK ACCOU NTS. 6.1. AS REGARDS THE APPELLANTS SUBMISSIONS THAT BY FOLLOWING THE PRINCIPLES OF CONSISTENCY, THE PRECEDENT SET UP BY THE A.O.S PREDECESSOR OUGHT TO HAVE BEEN APPLIED/FOLLOWED IN THE INSTANT CASE BY THE PRESENT A.O. AND NECESSARY BENEFITS ARISING THEREFROM MAY BE ALL OWED AND IN SUPPORT THEREOF, ID. COUNSEL FOR THE APPELLANT HAS CITED VA RIOUS CASE LAWS. BUT AFTER CONDUCTING COMPARATIVE ANALYSIS OF FACTS OF THE CAS E FOR THE ASSTT. YEAR 2006- 07 AND FOR THE CURRENT ASSTT. YEAR 2007-08, I T IS SEEN THAT THE APPELLANT HAD COME FORWARD WITH THE SURRENDER MADE LAST YEAR AMOUNTING TO RS.62,31,999 OUT OF WHICH RS.29,97,966/- FALLING TO HIS OWN SHARE, WAS ACCORDINGLY ASSESSED IN HIS HANDS FOR ASSESSMENT YE AR 2006-07. THIS YEAR, THE CONCEPT OF APPORTIONING BANK PEAK OF RS.28,24,9 37/- AMONGST THE OTHER THREE CO-OWNERS, NAMELY S/SH GURBAX SINGH, SARABJIT SINGH AND ONKAR SHARMA, HAS NEITHER BEEN CLAIMED AT THE ASSTT. STAG E, NOR HAS BEEN PRESSED BY THE APPELLANT DURING THE APPELLATE PROCEEDINGS, NOR THE SAME HAS BEEN ALLOWED BY THE DEPARTMENT. HENCE ON THIS POINT, NEI THER ANY COMMENTS ARE REQUIRED NOR ANY ADJUDICATION IS CALLED FOR. 6.2. IN MY CONSIDERED OPINION, SINCE AS PER PECUL IAR NATURE OF THE APPELLANTS BUSINESS OF REAL ESTATE, ALTHOUGH THE M ODUS OPERANDI AND PARTICULARS OF THE APPELLANTS BANK ACCOUNTS REMAIN ED THE SAME, BUT SINCE THE APPELLANT HAS HIMSELF COME FORWARD WITH THE PLE A THAT FIRSTLY LIKE LAST BENEFIT OF WORKING OUT BANKS PEAK CREDITS SHOULD BE DONE WHICH HAS BEEN WORKED OUT BY THE ASSESSEE AT RS.28,24,937/- IN ALL ITS FIVE BANK ACCOUNTS SO AS TO MAINTAIN CONSISTENT APPROACH OF ASSESSMENT ADOPTED BY A.O.S PREDECESSOR IN THE IMMEDIATELY PRECEDING ASSTT. YEA R AND NOW REQUIRED TO BE FOLLOWED BY THE PRESENT A.O. CONCERNED, AND FURTHER SINCE FROM PERUSAL OF THE BANK TRANSACTIONS, THE PEAK CREDIT BALANCE ARRI VED LAST YEAR ROTATED, SO IN ORDER TO AVOID DOUBLE TAXATION, CONSEQUENTIAL BE NEFIT OF CORRESPONDING FIGURES OF THE ACCEPTED PAST HISTORY OF THE CASE SH OULD HAVE BEEN ALLOWED. FOR THIS PURPOSE, THE APPELLANT HAS HIMSELF WORKED OUT PEAK CREDITS OF ALL HIS FIVE BANK ACCOUNTS AMOUNTING TO RS.28,24,937/- AND THE SAME DOES NOT ITA NO.391/ASR/2011 (A.Y.2007-08) ITO VS. SH. AJIT SINGH 4 EXCEED PROPORTIONATE PEAK CREDIT ADDITION OF RS.29, 97,966/- ALREADY ASSESSED LAST YEARS ASSTT. FOR THE AY 06.07 IN THE APPELLANTS HANDS, AS SUCH NO FURTHER ADVERSE INFERENCE IS NOT CALLED FOR ON THIS ACCOUNT. 6.3. HOWEVER, IT IS AN FACT THAT THE APPELLANT IS ADMIT TED AND EVIDENTLY INVOLVED AND ENGAGED IN THE BUSINESS OF REAL-ESTATE AND NO PRUDENT BUSINESS MAN DEVOTE HIS TIME, ENERGY AND RESOURCES WITHOUT ANY PROFIT MOTIVE AND THAT TOO WHEN DONE AT QUITE A LARGE SCAL E, AS IS THE PRESENT CASE. SO IT WOULD MEET THE ENDS OF JUSTICE, IF NET ASSESS ABLE BUSINESS INCOME IS DETERMINED BY APPLYING NET PROFIT RATE OF 5% ON THE ADMITTED BANK PEAK OF RS.28,24,937/- AND IN THIS WA Y, IT WOULD WORK OUT TO A NET ASSESSABLE INCOME OF RS.1,41,247/ - (OR SAY IN ROUND FIGURE) RS.1,41,250/- FROM REAL ESTATE BUSINESS OF THE APPELLANT, AS AGAINST THE ADDITION OF RS.70,07,814/- MADE BY THE A.O.. THIS WOULD RESULT INTO A RELIEF OF RS.68,66,564/-) 5. WE HAVE PERUSED THE ORDER IMPUGNED HEREIN AND OBSERV E THAT THE LD. CIT(A) WHILE ALLOWING THE PEAK CREDIT ON THE WORKING OUT OF THE ASSESSEE, CONSIDERED THE CONSISTENT APPROACH OF THE ASSESSMENT ADOPTED BY THE ASSESSING OFFICER IN THE IMMEDIATELY PRECEDING ASSESSMENT YEA R THE ROTATION OF PEAK CREDIT BALANCE ARRIVED LAST YEAR ROTATED AND IN ORDER TO AVOID DOUBLE TAXATION, CONSEQUENTIAL BENEFIT OF CORRESPONDING FIGUR ES OF THE ACCEPTED PAST HISTORY OF THE CASE. FURTHER THE LD. CIT(A) ALSO REASONE D THAT THE WORKING OUT THE PEAK CREDITS, THE ASSESSEE DOES NOT EXCEED PROPOR TIONATE PEAK CREDIT ADDITION OF RS.29,97,966/- ALREADY ASSESSED IN LAST YEAR S ASSESSMENT FOR AY 2006-07 IN THE ASSESSEES HANDS, AND THEREFORE NO FURTHER ADVERSE INFERENCE IS CALLED FOR. IT IS THE CASE OF THE ASSESSEE THAT THE ASSESSE E IS ADMITTEDLY INVOLVED AND ENGAGED IN THE BUSINESS OF REAL ESTATE AND NO PRUDENT BUSINESS MAN DEVOTE HIS TIME, ENERGY AND RESOURCES WITHOUT ANY P ROFIT MOTIVE AND THAT TOO WHEN DONE AT QUITE A LARGE SCALE, AS IN THE INSTANT CASE. THEREFORE THE LD. CIT(A) DETERMINED THE BUSINESS INCOME OF THE ASSESSEE BY APPLYING NET PROFIT RATE OF 5% ON THE ADMITTED BANK PEAK CRED IT OF RS.28,24,937/- WHICH COMES TO RS.1,41,247/-. ALTHOUGH THE REVENUE DEPARTMENT HAS RAISED THE OBJECTI ON THAT THE ASSESSEE DID NOT FILE ANY DECLARATION FOR DIVISION OF TOT AL CREDIT AS WAS ITA NO.391/ASR/2011 (A.Y.2007-08) ITO VS. SH. AJIT SINGH 5 ALLOWED LAST YEAR BY ANOTHER ASSESSING OFFICER WHO HAS A CCEPTED THE SHARE OF THE APPELLANT OF RS.29,97,966/- OUT OF THE TOTAL CRED ITS OF RS.62,31,999/- BUT IT IS A FACT AS OBSERVED BY THE LD. CIT(A) THAT UNEXPLA INED INCOME FOR THE CURRENT YEAR IS NOT TO BE TAXED AS LAST YEARS UNEXPLAINE D INCOME WHICH ALREADY BEEN STANDS TAXED THEREFORE ON THE AFORESAID CONSIDERATION AND ANALYZATION WE ARE OF THE CONSIDERED VIEW THAT THE O RDER UNDER CHALLENGE DOES NOT SUFFER FROM ANY PERVERSITY, ILLEGALITY AND IM PROPRIETY, HENCE WE DO NOT HAVE ANY HESITATION TO DISMISS THE APPEAL ON THE GR OUND RAISED BY THE REVENUE. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE DEPA RTMENT STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 .02.2019. SD/- SD/- (N.S.SAINI) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDI CIAL MEMBER DATED:14.02.2019 /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) M/S. SH. AJIT SINGH, PROP. M/S PAUL AUTO SPARES, KOT ATMA SINGH ROAD, AMRITSAR. (2) THE INCOME TAX OFFICER, WARD-3(1), AMRITSAR . (3) THE CIT(A), AMRITSAR (4) THE CIT CONCERNED (5) THE SR DR, I.T.A.T., AMRITSAR TRUE COPY BY ORDER FILENAME: AJIT SINGH 391-11 DIRECTORY: D:\DOCUMENT\NKC ORDERS 2018\NS SAINI & N KC TEMPLATE: C:\USERS\ETC PARMOD\APPDATA\ROAMING\MICROSOFT\TEMPLATES\NORMAL.D OT TITLE: IN THE INCOME TAX APPELLATE TRIBU NAL SUBJECT: AUTHOR: RAHUL PRABHAKAR KEYWORDS: COMMENTS: CREATION DATE: 2/13/2019 12:09:00 PM CHANGE NUMBER: 82 LAST SAVED ON: 2/25/2019 5:58:00 PM LAST SAVED BY: ETC PARMOD TOTAL EDITING TIME: 112 MINUTES LAST PRINTED ON: 2/25/2019 5:59:00 PM AS OF LAST COMPLETE PRINTING NUMBER OF PAGES: 6 NUMBER OF WORDS: 1,750 (APPROX.) NUMBER OF CHARACTERS: 9,976 (APPROX.)