Mr. Rakesh Kumar, Hardoi V. Income Tax Officer, Hardoi

ITA 422/LKW/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4854 (ITAT-LUCKNOW)
• Duration Of Justice: 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 05-01-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 25-06-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.422/LKW/2015 A.Y.:2011-12 SHRI RAKESH KUMAR, PROP. RAKESH KUMAR & BROTHERS, BUS STAND, MADHOGANJ, HARDOI. PAN:AAVPK20819Q VS. I.T.O., HARDOI. (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI SANJAY SAXENA, C.A. REVENUE BY SHRI AMIT NIGAM, SR. D.R. DATE OF HEARING 05/01/2016 DATE OF PRONOUNCEMENT 14/01/2016 O R D E R PER A. K. GARODIA, A.M. THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE OR DER OF LEARNED CIT (OSD)(A), BAREILLY DATED 20/03/2015 FOR ASSESSMENT YEAR 2011-2012. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: - 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEA LS), BAREILLY ERRED ON FACTS AND IN LAW IN CONFIRMING TH E ADDITION OF RS.37,222/- BEING THE EXTRA PROFIT ON T HE SALES OUTSIDE THE BOOKS OF ACCOUNT WITHOUT ANY MATERIAL ON RECORD. 2. THAT THE ID. COMMISSIONER OF INCOME TAX (APPEALS ), BAREILLY ERRED ON FACTS AND IN LAW IN CONFIRMING TH E ADDITION OF RS.1,50,000/- BY TREATING THE EXTRA CAS H PROFITS IN SPITE OF TAKING EXTRA PROFIT OF RS.37,22 2/- ON SALES TREATING THE PROFIT ON SALES OUTSIDE THE BOOK S WITHOUT ANY MATERIAL ON RECORD. 2 3. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ), BAREILLY ERRED ON FACTS AND IN LAW IN CONFIRMING TH E ADDITION OF RS.2,10,000/- BEING UNEXPLAINED CASH CREDIT IN THE BOOKS OF ACCOUNT WHICH HAD BEEN REJECTED AND WAS NOT TO BE CONSIDERED. 4. THAT THE ID. COMMISSIONER OF INCOME TAX (APPEALS ), BAREILLY ERRED ON FACTS AND IN LAW IN RESTRICTING T HE DISALLOWANCE OF EXPENSES @ 5% OF THE SHOP EXPENSES, TRAVELLING & CAR EXPENSES WHICH HAD BEEN DISALLOWED ONLY ON SURMISES. 3. LEARNED A.R. OF THE ASSESSEE REITERATED THE SAME ARGUMENTS WHICH WERE RAISED BEFORE LEARNED CIT (A). HE ALSO PLACED RELIANCE ON THE JUDGMENT OF HONBLE ALLAHABAD HIGH COURT RENDERED I N THE CASE OF CIT VS. I. V. SAHU CONSTRUCTION (P) LTD. AS REPORTED IN 222 TAXMAN 167 (ALLAHABAD) (MAG.). LEARNED D.R. OF THE REVENUE SUP PORTED THE ORDERS OF THE AUTHORITIES BELOW. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT IT IS NOTED BY THE A.O. IN THE ASSESSM ENT ORDER THAT ON 01.04.2010, THE CLOSING CASH AS PER CASH BOOK WAS R S. 10,05,598.31 BUT THE OPENING CASH IN CASH BOOK ON 02.04.2010 WAS SHO WN AT RS. 141,278.31, BEING LESS BY RS. 864,320/-. HE ALSO NO TED THAT ON 18.05.2010, THE OPENING CASH BALANCE WAS INCREASED BY THE SAME AMOUNT AS AGAINST THE CLOSING CASH BALANCE ON 17.05.2010. FROM THESE FACTS, THE A.O. INFERRED THAT THIS MUCH CASH OF RS. 864,320/- WAS USED BY THE ASSESSEE FOR ONE MONTH AND 16 DAYS FOR BUSINESS OUT SIDE BOOKS. HE WORKED OUT PROFIT OUTSIDE BOOKS AT RS. 37,222/- BY ADOPTING G. P. RATE OF 0.45% AS PER BOOKS ON ESTIMATED TURNOVER OUTSIDE BO OKS OF RS. 82,71,542/- WORKED OUT BY HIM ON THE BASIS OF DISCL OSED TURNOVER OF RS. 1916.12 LACS WITH CIRCULATING CAPITAL OF RS. 25.05 LACS. HE MADE ADDITION OF THIS AMOUNT WHICH IS DISPUTED BEFORE US AS PER G ROUND NO. 1. IN 3 ADDITION TO THIS, THE A.O. MADE ONE MORE ADDITION O F RS. 150,000/- ON THIS BASIS THAT THE ASSESSEE WITHDRAWN CASH FROM BANK IN SPITE OF HAVING SUFFICIENT CASH IN HAND AS PER BOOKS. THE A.O. ALLE GED THAT THIS EXTRA CASH WAS USED BY THE ASSESSEE FOR BUSINESS OUTSIDE BOOKS AND ON THE BASIS OF THIS ALLEGATION, HE MADE A LUMP SUM ADDITION OF RS. 150,000/- WHICH IS DISPUTED BEFORE US AS PER GROUND NO. 2. THEREAFTER THE A.O. NOTED THAT ON 03.08.2010, THE CLOSING CASH WAS RS. 16,13,742.40 B UT ON 04.08.2010, THE OPENING CASH WAS SHOWN AT RS. 18,23,742.40, WHICH I S EXCESS BY RS. 210,000/-. THIS WAS EXPLAINED BY THE MUNIM OF THE A SSESSEE THAT IT WAS A CLERICAL MISTAKE WHICH HAS BEEN RECTIFIED ON 02.09. 2010 AND DURING THIS PERIOD FROM 04.08.2010 TO 02.09.2010, THE CASH BALA NCE WAS ALWAYS IN EXCESS OF RS. 210,000/-. THE A.O. WAS NOT SATISFIED AND HE MADE ADDITION OF RS. 210,000/- U/S 68 WHICH IS DISPUTED BEFORE US AS PER GROUND NO. 3. IN ADDITION TO THESE, THE A.O. DISALLOWED 10% OF EX PENSES OUT OF SHOP EXPENSES AND TRAVELLING EXPENSES BY ALLEGING THAT T HE ASSESSEE FAILED TO PRODUCE COMPLETE VOUCHERS. THE DISALLOWANCES ARE RS . 4639/- AND RS. 5120/-. HE ALSO MADE A DISALLOWANCE OF RS. 9840/- O UT OF CAR RUNNING EXPENSES BEING 25% OF TOTAL CAR RUNNING EXPENSES OF RS. 39,360/- BY ALLEGING THAT PERSONAL USE OF CAR CANNOT BE RULED O UT. LEARNED CIT (A) RESTRICTED THESE DISALLOWANCES TO THE EXTENT OF 5% AS AGAINST 10% AND 25% BY THE A.O. THIS ISSUE IS RAISED AS PER GROUND NO. 4. 5. REGARDING THE MISTAKES IN CARRYING FORWARD THE C ASH BALANCES ON TWO DATES I.E. ON 02.04.2010 AND ON 04.08.2010 WHEN THE ASSESSEE SHOWN LESS CASH IN HAND ON THE FIRST OCCASION AND H IGHER CASH BALANCE ON THE SECOND OCCASION, WE ARE OF THE CONSIDERED OPINI ON THAT THE EXPLANATION OF THE ASSESSEE THAT THESE ARE CLERICAL MISTAKES DESERVES TO BE ACCEPTED BECAUSE EVEN IF THE ASSESSEE WANTED TO USE THE CASH FOR TURNOVER OUTSIDE BOOKS, THERE IS NO NECESSITY TO RE DUCE THE CASH BALANCE IN CASH BOOK ON 02.04.2010 AND INCREASE IT AGAIN ON 18.05.2010. SIMILARLY, 4 WHEN THE CASH IN HAND HAS NOT GONE DOWN BELOW RS. 2 .10 LACS DURING THIS PERIOD FROM 04.08.2010 TO 02.09.2010, THERE WAS NO NEED TO INCREASE THE CASH IN HAND IN BOOKS ON 04.08.2010 AND THEN REDUCE IT AGAIN ON 02.09.2010. HENCE, WE DELETE THE CONSEQUENTIAL ADDI TIONS OF RS. 37,222/- AND RS. 210,000/- AND ALLOW GROUND NO. 1 & 3. 6. REGARDING GROUND NO. 2 I.E. LUMP SUM ADDITION OF RS. 150,000/-, WE FIND THAT THIS ADDITION WAS MADE BY THE A.O. WITHOU T BRINGING ANY ADVERSE MATERIAL ON RECORD SUGGESTING THAT THE ASSESSEE WAS DOING ANY PURCHASE AND SALE OUTSIDE BOOKS. HE HAS MADE THIS LUMP SUM ADDIT ION ON THE BASIS OF THIS ALLEGATION THAT CASH WAS WITHDRAWN FROM BANK IN SPI TE OF HAVING SUFFICIENT CASH IN HAND. IN OUR CONSIDERED OPINION, HOW MUCH C ASH THE ASSESSEE WILL HAVE AS CASH IN HAND IS NOT TO BE DECIDED BY THE A. O. AND WITHOUT ANY ADVERSE MATERIAL ON RECORD, IT CANNOT BE ALLEGED TH AT THE CASH IN HAND WAS USED BY THE ASSESSEE FOR CONDUCTING BUSINESS OUTSID E BOOKS. HENCE, THIS ADDITION IS ALSO DELETED. GROUND NO. 2 IS ALSO ALLO WED. 7. REGARDING GROUND NO. 4 I.E. 5% DISALLOWANCE CONF IRMED BY CIT (A) OUT OF CAR RUNNING EXPENSES, SHOP EXPENSES AND TRAV ELLING EXPENSES, WE FEEL THAT CONFIRMING OF DISALLOWANCES TO THE EXTENT OF 5% IS REASONABLE WHEN THE ASSESEE COULD NOT PRODUCE COMPLETE VOUCHERS AND IN RESPECT OF CAR RUNNING EXPENSES FOR ALLEGED PERSONAL USE AND HENCE , THIS GROUND IS REJECTED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNT ANT MEMBER DATED:14 TH JANUARY, 2016. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR