The ITO, Ward-1(1), Bhavnagar V. Shri Vinodbhai Shivlal Bhuvariya (Thakkar), Bhavnagar

ITA 40/AHD/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9419 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 13-01-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 08-01-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRAVIN KUMAR
• Keywords: Unexplained cash credit; Income from undisclosed sources; Opportunity of being heard; Principle of natural justice
• Section: 133A; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 40/AHD/2014 (ASSESSMENT YEAR: 2005-06) ITO, WARD-1(1), BHAVNAGAR V/S VINODBHAI SHIVLAL BHUVARIYA, (THAKKAR), 308, STREET NO-5, VIJAYRAJNAGAR, BHAVNAGAR-364001 (APPELLANT) (RESPONDENT) PAN: ACMPT5499A APPELLANT BY : SHRI PRAVIN KUMAR, SR. D.R . RESPONDENT BY : NONE ( )/ ORDER DATE OF HEARING : 13 -01-201 7 DATE OF PRONOUNCEMENT : 16-01-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-I, AHMEDABAD DATED 30.10.2013 PERTAINING TO A.Y. 2009- 10. ITA NO. 40/A HD/2014 . A.Y. 2009-1 0 2 2. THE SUBSTANTIVE GRIEVANCE OF THE REVENUE READS AS U NDER:- 1. THE LD.CIT(A)-1, AHMEDABAD HAS ERRED ON FACTS AND C IRCUMSTANCES OF THE CASE IN ACCEPTING THE G.P. AT 4% WITHOUT APPRECIATING THAT THE ASSESSEE IS A RETAILER AND THE G.P. IN THIS BUSINESS IS MUCH MORE. 2. THE LD.CIT(A)-1, AHMEDABAD HAS ERRED ON FACTS AND C IRCUMSTANCES OF THE CASE IN NOT CONSIDERING THE INITIAL INVESTMENT IN THE BUSIN ESS OF PURCHASE & SALES OF GRAINS PARTICULARLY WHEN THE ASSESSEE HAS ADMITTED THAT THE WHOLE BUSINESS IS UNACCOUNTED. THEREFORE, HE OUGHT TO HAVE CONSIDERED THE INITIAL INVESTMENT IN THE BUSINESS WHICH SHOULD BE ALMOST EQUAL TO THE PEAK B ANK BALANCE AS UNACCOUNTED INCOME OVER AND ABOVE THE G.P ON THE UNACCOUNTED SA LES OF RS.3.16 CRORES FOR THE YEAR UNDER CONSIDERATION OUT OF TOTAL UNACCOUNTED S ALES OF RS.4.21 CRORE IN A.Y. 2008-09 & 2009-10. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE A SSESSEE FILED HIS RETURN OF INCOME ON 30.09.2009 DECLARING TOTAL INCOME AT RS. 2,50,783/-. THE RETURN WAS SELECTED FOR SCRUTINY ASSESSMENT AND ACCORDINGL Y STATUTORY NOTICES WERE ISSUED AND SERVED UPON THE ASSESSEE. 4. A SURVEY OPERATION WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE U/S. 133A OF THE ACT ON 12.12.2008. DURING THE COUR SE OF SURVEY PROCEEDINGS, INVENTORY OF CASH AND STOCK WAS TAKEN AND CASH OF RS. 36,605/- AND STOCK OF VARIOUS GRAIN WORTH RS. 3,68,935/- WER E FOUND. IN THE STATEMENT RECORDED DURING THE SURVEY PROCEEDINGS, T HE ASSESSEE ADMITTED THAT DEPOSITS OF RS. 2.67 CRORES IN THE BANK ACCOUN TS AND SALES TO THE EXTENT OF RS. 4.21 CRORES ARE HIS UNACCOUNTED INCOME. THOU GH THE EXACT FINANCIAL YEAR AND ASSESSMENT YEAR TO WHICH THE SAID UNACCOUN TED INCOME PERTAINED WAS NOT MENTIONED. ITA NO. 40/A HD/2014 . A.Y. 2009-1 0 3 5. WHILE SCRUTINIZING THE RETURN OF INCOME, THE A.O. N OTICED THAT THE ASSESSEE HAS NOT HONOURED HIS STATEMENT RECORDED ON OATH ON 12.12.2008 AND 28.02.2009 DURING THE COURSE OF SURVEY OPERATION U/ S. 133A AND POST SURVEY INVESTIGATION AND DID NOT SHOW TOTAL DEPOSIT S IN ALL THE BANK ACCOUNTS AS TOTAL INCOME FROM THE SAID BUSINESS. TH E A.O. NOTICED THAT THE TOTAL DEPOSITS IN THE BANK ACCOUNT DURING THE YEAR UNDER CONSIDERATION WERE RS. 29,57,150/- BY CASH AND RS. 87,17,226/- B Y CHEQUE TOTALING TO RS. 1,16,74,376/-. 6. THE A.O. ASKED THE ASSESSEE TO SHOW CAUSE WHY THE D EPOSITS BE NOT TREATED AS UNEXPLAINED. ASSESSEE FILED A DETAILED REPLY AND FURNISH THE BOOKS OF ACCOUNTS COVERING ALL THE BANKS, THE SALES AND PURC HASE INVOICES AND OTHER DOCUMENTS IMPOUNDED AND LYING WITH THE DEPARTMENT. IT WAS EXPLAINED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SAL ES AND PURCHASE OF WHEAT AND MILLET ON RETAIL BASIS AND THE MARGIN OF PROFIT IS VERY LOW. 7. THE DETAILED SUBMISSIONS AND THE RELEVANT SUPPORTIN G EVIDENCES DID NOT FIND ANY FAVOUR WITH THE A.O. THE A.O. WAS OF THE O PINION THAT SINCE THE ASSESSEE DID NOT SHOW ANY INCOME IN HIS RETURN OF I NCOME, THE ENTIRE DEPOSITS IN THE BANK ACCOUNTS HAS TO BE TREATED AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT. THE A.O. ACCORDINGLY MADE THE A DDITION OF RS. 11,67,48,376/-. 8. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) A ND REITERATED ITS CLAIM. ITA NO. 40/A HD/2014 . A.Y. 2009-1 0 4 9. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, TH E LD. CIT(A) OBSERVED THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE ARE NOT RELIABLE AND TREATED THE ENTIRE DEPOSITS IN THE BANK ACCOUNT AS THE TURNOVER OF THE ASSESSEE AND DIRECTED THE A.O. TO APPLY A GROSS PROFIT RATE OF 4 %. 10. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. NONE A PPEARED ON BEHALF OF THE ASSESSEE DESPITE OF NOTICE, WE HEARD THE LD. D.R. A T LENGTH AND HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BEL OW. 11. IT IS TRUE THAT HEAVY DEPOSITS WERE FOUND IN THE BA NK ACCOUNTS OF THE ASSESSEE, IN CASH AS WELL AS BY CHEQUE. IT IS ALSO TRUE THAT IN THE RETURN OF INCOME FILED BY THE ASSESSEE, THERE IS NO REFLECTIO N OF SUCH DEPOSITS. WE FIND THAT THE A.O. ASKED THE ASSESSEE TO EXPLAIN TH E DEPOSITS IN THE LIGHT OF THE PROVISIONS OF SECTION 68 OF THE ACT. HOWEVER, W E FIND THAT THE FIRST APPELLATE AUTHORITY HAS DECIDED THE ISSUE BY TREATI NG THE ENTIRE DEPOSITS AS TURNOVER OF THE ASSESSEE. WE ALSO FIND THAT THE FIR ST APPELLATE AUTHORITY DID NOT CALL FOR ANY REMAND REPORT FROM THE A.O. AND DE CIDED THE ISSUE ON HIS OWN. 12. THE DENIAL OF ANY OPPORTUNITY TO THE A.O. VIOLATES THE PRINCIPLES OF NATURAL JUSTICE. THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE RESTORE THIS ISSUE TO THE FILES OF THE A.O. THE A.O. IS DIRECTED TO DECIDE THE ISSUE AFRESH IN THE LIGHT OF THE OBSERVATIONS OF THE LD. CIT(A) AFTER GIVING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ITA NO. 40/A HD/2014 . A.Y. 2009-1 0 5 13. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS T REATED AS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON 16 - 01- 20 17 SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 16 /01/2017 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD