Sh. Mohinder Singh Chauhan, Delhi V. ITO, New Delhi

ITA 3957/DEL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53123 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 01-11-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 30-08-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R S NEGI
• Keywords: Business income; Peak credit
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E DELHI) BEFORE SHRI G.D. AGARWAL, HONBLE VICE PRESIDENT AND SHRI A.D. JAIN, JUDICIAL MEMBER ITA NO. 3957(DEL)2011 ASSESSMENT YEAR: 2005-06 SH. MOHINDER SINGH CHAUHAN, INCOME TAX OFFICER, K-637, SIRASPUR ROAD, LIBASPUR, V. WARD 2 5(4), NEW DELHI. DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI ANIL JAIN, CA RESPONDENT BY : SHRI R.S. NEGI, SR. DR ORDER PER A.D. JAIN, J.M . THIS IS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2005- 06 AGAINST THE ORDER DATED 30.6.2011 PASSED BY THE COMMISSIONER OF INCOME TAX(APPEALS)XXIV, NEW DELHI. THE FOLLOWING GROUND S HAVE BEEN TAKEN:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE IMPUGNED ASSESSMENT ORDER PASSED BY THE LEARNED ASSESSING OF FICER U/S 144 IS BAD IN LAW AND WRONG ON FACTS. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE IMPUGNED ASSESSMENT ORDER PASSED BY THE LEARNED ASSESSING OF FICER U/S 144 IS WITHOUT JURISDICTION. ITA 3957(DEL)2011 2 3. THAT THE IMPUGNED ASSESSMENT ORDER PASSED BY T HE LEARNED ASSESSING OFFICER IS AGAINST THE PRINCIPLES OF NATU RAL JUSTICE AND HAS BEEN PASSED WITHOUT AFFORDING REASONABLE OPPORTUNIT Y OF BEING HEARD. 4. THAT THE LD. AO HAS ERRED BOTH IN LAW AS WELL AS IN FACTS OF THE CASE IN MAKING AN ADDITION OF ` 10,22,800/- ON THE BASIS OF AIR INFORMATION. 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND THE PROVISIONS OF THE LAW THE LEARNED ASSESSING OFFICER HAS ERRED IN INITIATING THE PROCEEDINGS U/S 271(1)(B) AND 271(1)(C) OF THE INCO ME TAX ACT, 1961. 2. AT THE TIME OF HEARING, THE SOLE CONTENTION R AISED BY THE LEARNED COUNSEL FOR THE ASSESSEE IS THAT THE PERSONAL WITHDRAWAL AT ` 90,500/- BE SET OFF AGAINST THE ADDITION ON ACCOUNT OF G.P. ON UNACCOUN TED SALE OF ` 1,55,000/-. 3. THE SUBMISSION ON BEHALF OF THE ASSESSEE IS FOUND TO BE JUSTIFIED. THE LD. CIT(A), IN THE IMPUGNED ORDER, AS OBSERVED, INT ER ALIA, AS FOLLOWS:- 5. I HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF T HE ASSESSING OFFICER AS WELL AS THE APPELLANT AND I AM OF THE OP INION THAT ONCE THE APPELLANT HAD MADE A CLAIM THAT ACCOUNT NO.700315 O F UCO BANK, NEW SABZI MANDI, DELHI PERTAINED TO HIS UNACCOUNTED PURCHASE AND SALES TRANSACTIONS OF CHEMICALS AND ONCE DIRECTIONS WERE ISSUED TO THE ASSESSING OFFICER U/S 250(4) OF THE ACT TO CARRY O UT REQUISITE ENQUIRIES TO VERIFY THE CLAIM OF THE ASSESSEE, IT W AS INCUMBENT UPON THE ASSESSING OFFICER TO CONCLUSIVELY PROVE THAT TH E CLAIM OF THE APPELLANT WAS WRONG. HOWEVER, HE HAS BEEN ABLE TO DO SO ONLY WITH REGARDS TO TWO ENTRIES AMOUNTING TO ` 90,500/-. THE APPELLANT HAS ACCEPTED THIS AMOUNT TO BE WITHDRAWALS FOR PERSONAL PURPOSES. ITA 3957(DEL)2011 3 5.1 A PERUSAL OF THE SAID BANK ACCOUNT NO. 700315 OF UCO BANK, NEW SABZI MANDI, DELHI REVEALS THAT THE PEAK BALANC E AVAILABLE IN THE ACCOUNT IS ON 10.01.2005 AMOUNTING TO ` 76,231.50. 5.2 THE APPELLANT HAS HIMSELF AGREED THAT HIS GROSS PROFIT FROM HIS REGULAR BUSINESS VARIES FROM 10% -15% OF SALES. T HE TOTAL SALES AS PER THIS AMOUNT COMES TO ` 10,22,800/-. 15% OF THIS AMOUNT COMES TO ` 1,53,420/-. IN MY CONSIDERED OPINION IT WOULD MEE T THE ENDS OF JUSTICE IF THE INCOME OF THE APPELLANT IS CALCULATE D FOR A.Y. 2005-06 IN THE FOLLOWING MANNER:- ` A) INCOME AS PER RETURN OF INCOME 97,500/- B) ADDITION ON ACCOUNT OF GP ON UNACCOUNTED SALES 1,55,000/- C) ADDITION ON PEAK CREDIT REPRESENTING INITIAL INVESTMENT 80,000/- D) DEBIT ENTRIES IDENTIFIED AS PERSONAL 90,500/- -------------------- TOTAL INCOME 4,23,000/- ------------------- 4. FROM THE ABOVE, IT IS SEEN THAT THE AO ESTIMA TED THE ASSESSEES GROSS PROFIT ON THE BASIS OF ENTRIES IN THE UNACCOUNTED B OOKS. ONCE THE G.P. IS ESTIMATED, IT TAKES CARE OF EVERY RECEIPT AND EXPEN DITURE. THEREFORE, WHEN A G.P. ADDITION IS MADE, NO SEPARATE ADDITION BY WAY OF ANY DISALLOWANCE OF ANY EXPENDITURE DEBITED IN THE ACCOUNT IS CALLED FO R. THEREFORE, WE AGREE ITA 3957(DEL)2011 4 WITH THE ASSESSEES SUBMISSION THAT ONCE THE G.P. A DDITION IS MADE, SEPARATE ADDITION FOR DEBIT ENTRIES COULD NOT HAVE BEEN MAD E. THEREFORE, WE DELETE THE ADDITION IN RESPECT OF DEBIT ENTRIES IN SUCH BO OKS OF ACCOUNT AMOUNTING TO ` 90,500/- . THE INCOME OF THE ASSESSEE AT ` 4,23,000/-, AS CALCULATED BY THE LD. CIT(A) IS REDUCED TO ` 3,32,500/-. THE LD. DR WOULD HAVE NO OBJECTION. 5. NO OTHER ARGUMENT WAS RAISED BEFORE US. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED, AS INDICATED. ORDER PRONOUNCED IN THE OPEN COURT ON 1.11.2011. SD/- SD/- (G.D. AGARWAL) (A.D. JAIN) VICE PRESIDENT JUDICIAL MEMBER DATED: 1.11.2011 *RM COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR TRUE COPY BY ORDER ITA 3957(DEL)2011 5 DEPUTY REGISTRAR