Sh. Vipan Kumar, Mohali V. ITO, Chandigarh

ITA 401/CHANDI/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6142 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 28-05-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 11-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 401/CHD/2013 ASSESSMENT YEAR: 2009-10 SHRI. VIPAN KUMAR, VS. THE ITO PROP. M/S SHIVA MOTORS, WARD 5(3) PLOT NO. 46, VILL. BURAIL CHANDIGARH, CHANDIGARH NOW AT #HE348, PHASE 7 MOHALI PAN NO. ARBPK1617P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. PARIKSHIT AGGARWAL RESPONDENT BY : SHRI. MANJIT SINGH DATE OF HEARING : 28/05/2014 DATE OF PRONOUNCEMENT : 09/06/2014 ORDER PER T.R.SOOD, A.M. THE APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A)- CHANDIGARH DATED 18.01.2013. 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEA L: 1. THAT ON FACTS, CIRCUMSTANCES AND LEGAL POSITION OF THE CASE, THE WORTHY CIT(A) THROUGH HIS ORDER DATED 18.01.2013 HAS ERRED IN PAS SING THAT ORDER IN CONTRAVENTION OF THE PROVISIONS OF SECTION 250(6) O F THE INCOME TAX ACT, 1961. 2. THAT ON THE FACTS, CIRCUMSTANCES AND LEGAL POSIT ION OF THE CASE, THE WORTHY CIT(A) HAS ERRED IN UPHOLDING THE ADDITION TO AN EX TENT OF RS. 9,86,875/- (OUT OF TOTAL ADDITION OF RS. 50,88,375/-) MADE BY LD. A .O. ON ACCOUNT OF CASH DEPOSIT IN BANK ACCOUNT(S) EVEN WHEN THE SOURCE OF SAID DEPOSIT WAS DULY EXPLAINABLE 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT DURI NG THE ASSESSMENT PROCEEDING AO NOTICED THAT ASSESSEE WAS DERIVING INCOME FROM SALE OF SPARE PARTS IN RETAIL TRADING OUT OF THE TOTAL LOSS VEHICLES PURCHASED BY THE ASSESSEE F ROM INSURANCE COMPANIES. AO FURTHER NOTICE THAT AS PER THE AIR INFORMATION ASSESSEE HAD DEPOSITED RS. 50,88,375/- IN THE BANK ACCOUNT. IN RESPONSE TO THIS QUERY IT WAS SUBMITTED THAT ASSESSEE HAD FILED RETURN U/S 44 AF AND TURNOVER WAS RS. 35,60,500/- ON WHICH PROFIT OF 8.53% WAS SHOWN AMOUNTING TO RS. 3,03,680/- WHICH WAS MORE THAN 5% OF THE GROSS SALE. ASSESSEE WAS ASKED TO SHOW THE BASIS OF TURNOVER AND IT WAS SUBMITTED THAT GRO SS RECEIPTS WERE TAKEN ON THE BASIS OF PROVISIONAL RECORDS MAINTAINED BY THE ASSESSEE. AO WAS NOT SATISFIED AND OBSERVED THAT LD. COUNSEL OF THE ASSESSEE HAD ADMITTED THAT BILLS /VOUCHER WERE NOT AVAILABLE THEREFORE TURNOVER OF THE ASSESSEE WAS BOGUS SINCE ASSESSEE H AD DEPOSITED THE SUM OF RS. 50,88,375/- FOR WHICH NO SOURCE WAS AVAILABLE THIS AMOUNT WAS ADDED TO THE INCOME OF THE ASSESSEE. 4. ON APPEAL BEFORE LD. CIT(A) IT WAS MAINLY SUBMIT TED THAT ASSESSEE WAS DOING RETAIL TRADING OF PARTS OF DISMANTLED VEHICLES. ALL MAJOR PAYMENTS FOR PURCHASING SUCH DISMANTLE VEHICLE FROM INSURANCE COMPANIES WERE MAD E THROUGH DEMAND DRAFT. THE CASH WAS DEPOSITED OUT OF THE RETAIL SALE OF THE SPARE P ARTS AND ASSESSEE HAD DECLARED SALE OF RS. 35,60,500/-. 5. LD. CIT(A) ACCEPTED THESE CONTENTIONS AND OBSERV ED THAT ACTUAL CASH DEPOSITED WAS RS. 45,47,375/-. HE FURTHER FOUND THAT CASH SAL E OF PARTS WAS ONLY RS. 27,57,498/- AND THE BALANCE AMOUNT OF SALE AMOUNTING TO RS. 8,03,00 2/- WAS ON ACCOUNT OF CHEQUES. ULTIMATELY HE ALLOWED PART RELIEF. REASONS FOR WHIC H ARE GIVEN IN PARA 3.3.4 WHICH IS AS UNDER : 3.3.4 THE APPELLANT HAS PREPARED A CASH BOOK AND MADE AN ATTEMPT TO EXPLAIN THE CASH DEPOSIT OF RS. 45,47,375/- IN THE BANK ACC OUNT, BUT HAS NOT EXPLAINED THE SOURCE OF DEPOSIT OF CASH OVER AND ABOVE THE GROSS RECEIPTS OF RS. 35,60,500/-. IN FACT, WHILE EXPLAINING THE UTILIZATION OF CASH WITH DRAWALS IN THE CASH TRANSACTIONS, WITHDRAWAL FOR HOUSEHOLD EXPENSES HAS BEEN SHOWN RS . 84,000/- ONLY, WHICH IS QUITE LOW AND SO IT HAS TO BE CONCLUDED THAT THE CA SH BOOK PREPARED IS NOT A REFLECTION OF THE ACTUAL AFFAIRS. THE EXCESS CASH D EPOSITED IN THE BANK ACCOUNT OF RS. 9,86,875/- (45,47,375 35,60,500) IS TO BE TRE ATED AS UNEXPLAINED. HENCE, OUT OF TOTAL ADDITION MADE OF RS. 50,88,375/-, ADDITION OF RS. 9,86,875/- IS SUSTAINED. APPELLANTS GET RELIEF OF RS. 41,01,500/- (50,88,37 5 9,86,875/-). 6. BEFORE US LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT ASSESSEE HAD PREPARED A CASH BOOK AND ALL THE CASH DEPOSITED IN THE BANK IS OUT OF THE CASH BOOK AND AO HAS NOT FOUND ANY CONCEALED TRANSACTION. IN ANY CASE AT BEST THE EXTRA AMOUNT OF CASH DEPOSITED CAN BE SAID TO BE OUT OF THE SALE PROCEEDS AND THE REASONA BLE PROFIT RATE MAY BE SUBMITTED ON THE SAME. 7. ON THE OTHER HAND LD. DR SUPPORTED THE ORDER OF LD CIT(A). 8. AFTER CONSIDERING THE RIVAL SUBMISSION WE FIND N O FORCE IN THE SUBMISSION OF LD. COUNSEL FOR THE ASSESSEE. THE ASSESSEE HAS FILED RE TURN U/S 44AF WHICH MEAN ASSESSEE IS NOT MAINTAINING ANY BOOKS OF ACCOUNT. THERE IS NO A LLEGATION THAT CASH HAS COME FROM UNACCOUNTED SOURCE. THEREFORE, EXTRA CASH DEPOSITED IS TO BE TREATED AS SALE ONLY. ACCORDINGLY WE ESTIMATE FURTHER NET PROFIT OF RS. 1 LAC AND ALLOW THE RELIEF TO THE EXTENT OF RS. 8,86,875/-. AO IS DIRECTED TO MAKE NET ADDI TION OF RS. 1 LAC IN THE INCOME OF THE ASSESSEE. 9. IN THE RESULT, APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 09.06.2014. SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 09 TH JUNE, 2014 AG COPY TO: 1.THE APPELLANT,2.THE RESPONDENT,3.THE CIT,4.THE CI T(A),5.THE DR