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

ITA 431/ASR/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0606 (ITAT-AMRITSAR)
• Duration Of Justice: 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 03-01-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 20-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R L CHHANALIA
• Assessee Lawyers: PADAM BAHL
• Keywords: Business income
• Section: 80C; 234B; 133(6); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.431(ASR)/2012 ASSESSMENT YEAR:2007-08 PAN :ABMPS4147D SH. SURJIT SINGH, VS. THE INCOME TAX OFFICER (TEC H.) C/O M/S. FANCY SHOP, AMRITSAR. SWANK MANDI, AMRITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. PADAM BAHL, CA RESPONDENT BY:SH. R.L.CHHANALIA, DR DATE OF HEARING: 03/01/2013 DATE OF PRONOUNCEMENT:08/01/2013 ORDER PER BENCH ; THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE CIT(A), AMRITSAR, DATED 16.10.2012 FOR THE ASSESSMENT YEAR 2007-08. THE ASSESSE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE WORTHY CIT(A), AMRITSAR, HAS GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS.1,94,710/- BEING 20% OF BANK DEPOSITS OF RS.9,73,551/- MADE BY THE AO BY TREATING THE SA ME AS CAPITAL EMPLOYED. ITA NO.431(ASR)/2012 2 2. THAT THE WORTHY CIT(A), AMRITSAR AND LD. AO HAS GROSSLY ERRED IN NOT APPRECIATING THE FACT THAT THE ASSESS EE HAS BEEN DOING BUSINESS FOR THE LAST MORE THAN 5 YEARS AND HAD SU FFICIENT CAPITAL EMPLOYED FOR BUSINESS. 3. THAT THE WORTHY CIT(A), AMRITSAR, HAS GROSSLY E RRED IN CONFIRMING THE ADDITION OF RS.48,678/- MADE BY THE AO BEING 5% OF BANK DEPOSITS OF RS.9,73,551/- BY TREATING THE SAM E AS NET PROFIT EARNED. 4. THAT THE WORTHY CIT(A), AMRITSAR, HAS GROSSLY E RRED IN CONFIRMING THE ACTION OF THE AO IN NOT ALLOWING DE DUCTION U/S 24 FOR INTEREST PAID ON HOUSING LOAN AND PRINCIPAL OF HOU SING LOAN U/S 80C AT RS.50,350/-. 5. THAT THE WORTHY CIT(A), AMRITSAR, HAS GROSSLY E RRED IN NOT APPRECIATING THAT THE ASSESSEE HAD SHOWN SALES OF RS.9,55,360/- U/S 44AF AND HAD OFFERED NET PROFIT @ 12.30% AND HAD O FFERED NET PROFIT @ 12.30% AND BANK DEPOSITS WERE OUT OF THESE SALES . 6. THAT THE WORTHY CIT(A), AMRITSAR, HAS GROSSLY E RRED IN CONFIRMING INTEREST CHARGED U/S 234B AT RS.18.435/ - BY THE A.O. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE CASE O F THE ASSESSEE WAS TAKEN UNDER SCRUTINY ON THE BASIS OF AIR INFORMATION.. TH E ASSESSEE DECLARED INCOME UNDER SECTION 44AF OF THE ACT ON THE TOTAL S ALES OF RS.9,55,360/- AND NET PROFIT @ 12.30%. IT WAS OBSERVED BY THE ASSESSI NG OFFICER THAT AS PER AIR INFORMATION, THE ASSESSEE IS STATED TO BE HAVIN G HIS BANK ACCOUNT WITH PNB. CONSEQUENTLY, VIDE NOTICE U/S 133(6) DT.27.11. 09 CERTIFIED COPY OF ASSESSEES BANK A/C ALONG WITH CERTIFIED COPY OF BA NK OPENING FORM WAS CALLED FROM THE PNB AS PER INFORMATION RECEIVED, IT WAS NOTICED THAT JOINT BANK ACCOUNT NO.001700240205 IN PNB IS BEING MAINTA INED IN FOUR NAMES ITA NO.431(ASR)/2012 3 S/SH/SMT. SURJIT SINGH, UPINDER SINGH, BALVIR KAUR AND SMT. AMARDEEP KAUR. APART FROM OPENING CREDIT BALANCE B/FD AMOUN TING TO RS.2,518/-, IT CONTAINS ALMOST CASH DEPOSITS AND CASH WITHDRAWALS (ENCASHMENT OF SELF- CHEQUES) FROM TIME TO TIME SHOWING CLOSING CREDIT B ALANCE OF RS.1,750/-. ON BEING REQUIRED TO EXPLAIN THE VARIOUS CASH DEPOSITS AND CASH WITHDRAWALS, IT WAS EXPLAINED THAT THESE REPRESENT DEPOSITS AND RE CYCLED DEPOSITS. AS REGARDS THE CASH WITHDRAWALS ( BY WAY OF ISSUING SE LF(BEARER CHEQUES), THE SAME IS STATED TO BE REPRESENTING PAYMENTS MADE TO THE KARIGARS OF EMBROIDERY AS THEY WERE INSISTING UPON CHEQUE PAYME NTS. OUT OF FOUR BANK ACCOUNT HOLDERS, STATEMENT U/S 131 WERE RECORDED IN RESPECT OF THE ASSESSEE AND HIS SON, SH. UPINDER SINGH WHEREAS IN RESPONSE TO QUERY NO.5, THE APPELLANT DEPOSED THAT HE VIRTUALLY DID NOT KNOW AB OUT MAINTAINING ANY BANK ACCOUNT AND THEN SUDDENLY TAKEN A TWISTED STAND THA T ALTHOUGH HE HAD DISCLOSED THIS BANK ACCOUNT TO HIS COUNSEL WHO OMIT TED TO DISCLOSE IT TO THE DEPTT. THE SECOND DEPONENT SH. UPINDER SINGH HAS ST ATED THAT ALL THE FOUR CO-BANK ACCOUNT HOLDERS MADE CASH DEPOSITS IN THIS ACCOUNT FOR REPAYING THE PRINCIPAL AND INTEREST ACCRUED ON THEIR HOUSING LOA N TAKEN FROM PNB HOUSING FINANCE OF THE SAME BANK DATE WISE DETAILS OF REPAYMENTS AMOUNTING TO RS.2,01,440/- @ RS.17400/- P.M. STAND INCORPORATED AT PAGE 4 OF THE AOS ASSESSMENT ORDER, OUT OF WHICH APPELLAN TS SHARE IS WORKED OUT ITA NO.431(ASR)/2012 4 AT RS.50,350/-. AFTER GIVING BENEFIT FOR THE OPENIN G CREDIT BALANCE, THE AO WORKED OUT THE UNEXPLAINED BANK DEPOSITS AMOUNTING TO RS.9,73,551/-. AFTER TAKING INTO ACCOUNT THE BANK HOUSING LOAN REPAYMENT , THE AO MADE AN ADDITION AFTER WORKING OUT UNDISCLOSED BUSINESS SAL ES AT RS.1,94,710/- TOWARDS CAPITAL EMPLOYED FOR MAKING PURCHASES @ 20% OF THE NET TOTAL UNEXPLAINED BANK DEPOSITS OF RS.9,73,551/- AND SECO ND ADDITION OF RS.48,678/- BEING THE NET UNDISCLOSED PROFIT WORKED OUT @ 5% OF SUCH UNDISCLOSED SALES OF RS.9,73,551/-. THUS, TOTAL TRA DING ADDITIONS AMOUNTING TO RS.2,43,388/- [RS.194710 + 48678) HAVE BEEN MADE AS ASSESSEES UNDISCLOSED BUSINESS INCOME FROM UNDISCLOSED SOURCE S. 3. THE LD. CIT(A), CONFIRMED THE ACTION OF THE ASS ESSING OFFICER. 4. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) AND THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE FACTS. THE EXPLANATION OF THE ASSESSEE AND THE FINDINGS OF THE LD. CIT(A) AT PARA 9 ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS FO R THE LAST SIX YEARS IS AN UNDISPUTED FACT. THEREFORE, THE OPENING BALANCE IN THE BANK ACCOUNT IS A RESULT OF THE CLOSING BALANCE OF THE PRECEDING YEAR IS NOT IN DISPUTE. THE ASSESSEE HAS ALSO CONFIRMED IN THE STATEMENT RECORD ED THAT HE IS DOING ITA NO.431(ASR)/2012 5 BUSINESS OF READYMADE GOODS AND PURCHASES GOODS FRO M AMRITSAR & DELHI PARTIES. HE ALSO CONFIRMED THAT HE GOT SOME SUITES EMBROIDERED FROM KARIGARS. THE ASSESSEE HAS DECLARED INCOME AS PER S ECTION 44AF OF THE ACT BEING THE RETAIL PROFITS. THIS FACT IS NOT DENIED B Y ANY OF THE AUTHORITIES BELOW. AS PER SECTION 44AF OF THE ACT, A SUM OF EQU AL TO 5% OF THE TOTAL TURNOVER IN THE PREVIOUS YEAR ON ACCOUNT SUCH BUSIN ESS OR, AS THE CASE MAY BE, A SUM HIGHER THAN THE AFORESAID SUM AS DECLARED BY THE ASSESSEE IN HIS RETURN OF INCOME IS DEEMED TO BE THE PROFITS AND GA INS OF SUCH BUSINESS CHARGEABLE TO TAX UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION. IN THIS REGARD, THE ASSESSEE HAVING DE CLARED A SUM HIGHER THAN 5% OF THE TOTAL TURNOVER IS NOT UNDER DISPUTE. THE ASSESSEE IS DOING BUSINESS ON RETAIL TRADE IS ALSO NOT IN DISPUTE. THE ASSESSE E IS ALSO DOING BUSINESS FOR THE LAST SIX YEARS IS ALSO AS PER FINDINGS OF THE LD. CIT(A).EVEN IF ANY DEPOSIT IS MADE IN THE BANK FOR REPAYMENT OF LOAN, THE SAME MAY BE OUT OF THE PAST SAVINGS OF THE ASSESSEE AND WITHOUT ANY EV IDENCE ON RECORD, THE SAME CANNOT BE DOUBTED. THE TURNOVER BEING LESS THA N 40 LACS, THE CASE IS DIRECTLY COVERED U/S 44AF OF THE ACT FOR THE IMPUGN ED YEAR AND THE ASSESSEE HAVING DECLARED THE SAME HIGHER THAN 5% OF THE TOTA L TURNOVER IN THE IMPUGNED YEAR AND THE INCOME U/S 44AF FALL UNDER TH E DEEMING PROVISIONS, THE SAME HAS TO BE ACCEPTED AS PROFITS AND GAINS CH ARGEABLE TO TAX UNDER THE ITA NO.431(ASR)/2012 6 HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION. THEREFORE, WE DO NOT FIND ANY DEFECT IN THE EXPLANATION OF THE ASSESSEE WHICH SHOULD HAVE BEEN ACCEPTED BY THE A.O. THE LD. CIT(A) IS NOT JUSTIFIE D IN CONFIRMING THE ORDER OF THE A.O. ACCORDINGLY, THE ORDER OF THE LD. CIT(A ) IS REVERSED AND THE AO IS DIRECTED TO ACCEPT THE CLAIM OF THE ASSESSEE. T HUS, ALL THE GROUNDS OF APPEAL OF THE ASSESSEE ARE ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSE IN ITA NO.431(ASR)/2012 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 8TH JANUARY, 2013. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 8TH JANUARY, 2013 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: SH. SURJIT SINGH, AMRITSAR. 2. THE ITO (TECH), ASR. 3. THE CIT(A), ASR. 4. THE CIT, ASR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.