Monoj Sahu, Biswanath V. Income Tax Officer, Ward-1, Tezpur

ITA 446/GTY/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 2673 (ITAT-GUWAHATI)
• Duration Of Justice: 1 year(s) 11 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 18-11-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NONGUTHUNG JUNGIO
• Assessee Lawyers: SHEKHAR AGARWAL
• Keywords: Presumptive income; Business income; Set aside
• Section: 68; 251; 72

Judgement Text

1 ITA NO. 445&446/GAU/2019 MANOJ SAHU, AY. 2015-16 IN THE INCOME TAX APPELLATE TRIBUNAL GAUHATI BENC H: GUWAHATI HEARING AT KOLKATA [BEFORE SHRI P. M. JAGTAP, VICE-PRESIDENT (KZ) AND SHRI A. T. VARKEY, JM] I.T.A. NOS. 445&446/GAU/2019 ASSESSMENT YEAR: 2015-16 MONOJ SAHU (PAN: DWFPS 7933 L) VS. ITO, WARD-1, TEZPUR APPELLANT RESPONDENT DATE OF HEARING (VIRTUAL) 20.10.2021 DATE OF PRONOUNCEMENT 28.10.2021 FOR THE APPELLANT SHRI SHEKHAR AGARWAL, A.R. FOR THE RESPONDENT SHRI NONGUTHUNG JUNGIO, ADDL. CI T SR. D.R ORDER PER SHRI P.M. JAGTAP, VICE-PRESIDENT: ITA NO. 445/GAU/2019 IS AN APPEAL PREFERRE D BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-GUWAHATI-1 DATED 11.03.2019 FO R ASSESSMENT YEAR 2015-16 WHICH IS THE QUANTUM APPEAL AND THE OTHER APPEAL IT A NO. 446/GAU/2019 IS AN APPEAL AGAINST PENALTY U/S 271 (1)(C ) OF THE INCOM E TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2. THE SOLE GROUND OF APPEAL RAISED BY THE ASSESS EE IN QUANTUM APPEAL (ITA NO. 445/GAU/2019) IS AGAINST THE ACTION OF LD. CIT( A) ENHANCING THE TOTAL INCOME BY EXERCISING HIS POWERS U/S 251 OF THE ACT BY MAK ING ADDITION OF RS. 85,89,312/- U/S 68 OF THE ACT. 3. BRIEF FACTS AS NOTED BY THE AO IS THAT THE ASSES SEE HAD FILED RETURN OF INCOME SHOWING TOTAL INCOME OF 2,35,410/-. LATER THE CASE WAS SELECTED THROUGH CASS IN RESPECT OF CASH DEPOSIT FOR EXAMINATION. THE AO NOT ES THAT THE ASSESSEE HAS STATED 2 ITA NO. 445&446/GAU/2019 MANOJ SAHU, AY. 2015-16 THAT HE IS INTO THE BUSINESS OF DEALING POTATO/ONIO N AND GROCERY IN RETAIL IN SMALL SCALE AND HAS INCOME THEREFROM BESIDES INCOME FROM PLYING OF A MINI TRUCK. THE ASSESSEE HAD SHOWN NET INCOME FROM BUSINESS OF PLYI NG MINI TRUCK U/S 44AE OF THE ACT AT RS. 90,000/- AND NET PROFIT AS PER INCOME & EXPENDITURE FROM BUSINESS OF RS. 1,45,410/-. THUS TOTAL INCOME OF RS. 2,35,410/-. TH E AO ALSO NOTES THAT THE ASSESSEE HAD SHOWN GROSS RECEIPT OF RS. 18,17,625/- OUT OF W HICH THE GROSS PROFIT WERE SHOWN AT RS. 2,18,110/- LESS EXPENSES OF RS. 72,700/- THU S NET PROFIT AT RS. 1,45,410/-. AS PER THE ASSESSEE, IT HAS ONLY ONE SAVINGS BANK ACCO UNT WITH SBI (SOOTEA) AND IN ITS BANK ACCOUNT TOTAL AMOUNT DEPOSITED /CREDITED WAS T O THE TUNE OF RS. 93,99,312/-. ACCORDING TO THE ASSESSEE, THE SOURCES OF CASH DEPO SIT IN BANK WAS THAT OF THE SALE PROCEED AND FREIGHT/INCOME FROM MINI TRUCK. THUS TH E AO OBSERVES THAT THE ASSESSEE TRIED TO ESTABLISH THAT THE SALE PROCEED OF THE BUS INESS OF POTATO ETC. WAS TO THE TUNE OF RS. 18,17,625/- AND THE FREIGHT IS TO THE TUNE O F RS. 75,81,687/- TOTALING TO RS. 99,99,312/-. THE AO THEREAFTER NOTES THAT THE TOTAL CASH DEPOSIT ON DIFFERENT DATES DURING THE YEAR IS TO THE TUNE OF RS. 82,06,499/- A ND HE THEREAFTER MENTIONED EIGHT (8) DATES IN THE FORM OF CHART AT PAGE 3 OF HIS ORD ER WHEREIN INSTANCES OF DEPOSITS/WITHDRAWALS ARE SHOWN TO HAVE TAKEN PLACE. THE AO ACKNOWLEDGES THAT SOME OF THE REMITTANCE MADE WERE TO THE MERCHANTS O F POTATO/ONION HOWEVER HE WAS NOT SATISFIED THAT THE DEPOSITS MADE IN THE ACCOUNT . THE AO NOTES THAT THE ASSESSEE HAS A MINI TRUCK (CAMPER). THE AO ALSO NOTES THAT THE ASSESSEE HAD NOT SHOWN ANY INCOME FROM THE RUNNING BUSINESS OF MINI TRUCK INI TIALLY IN HIS RETURN OF INCOME HOWEVER HAS BROUGHT IN THE GROSS-INCOME FROM THE MI NI TRUCK TO THE TUNE OF RS. 75,81,840/- WHICH IN THE AVERAGE COMES TO RS. 6,31, 280/- MONTHLY AND THE ASSESSEE HAS OFFERED ONLY RS. 90,000/- AS TAX ON PRESUMPTIVE BASIS U/S 44AE OF THE ACT, WHICH FACT [ I.E, RS 75,81,840/- FROM MINI-TRUCK ]THE AO DID NOT BELIEVE. IT IS INFERRED THAT AO ASSUMED THAT THIS INCOME FROM MINI TRUCK WA S AN AFTERTHOUGHT TO COVER/EXPLAIN THE CASH DEPOSIT IN THE BANK ACCOUNT. THEREFORE, ACCORDING TO HIM (IT IS INFERRED), IF THE GROSS-INCOME FROM MINI TRUCK I S KEPT ASIDE, THEN IT CAN BE SEEN THAT THE ASSESSEE HAS SUPPRESSED THE PROFIT FROM PO TATO AND ONION ETC. TO THE TUNE OF RS. 72,00,000/-. THEREFORE HE DID NOT ACCEPT THE AS SESSEES SALE PROCEED FROM POTATO/ONION AT RS. 18,17,625/-, THEREFORE HE TOOK THE SAME AT RS. 90,00,000/- AND 3 ITA NO. 445&446/GAU/2019 MANOJ SAHU, AY. 2015-16 THEREAFTER BY APPLYING A FLAT RATE OF 8% OF THAT AM OUNT COMPUTED TAX AT RS. 7,20,000/- AND ADDED ALSO THE INCOME OFFERED BY THE ASSESSEE FROM GOODS CARRIAGE AT RS. 90,000/-. THUS COMPUTING TOTAL INCOME OF ASS ESSEE AT RS. 8,10,000/- (RS. 7,20,000/- + RS. 90,000) 4. AGGRIEVED BY THE AFORESAID ORDER OF THE AO THE A SSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO GAVE ENHANCEMENT NOTICE U NDER EXPLANATION TO SECTION 251(2) OF THE ACT. THE LD. CIT(A) WAS OF THE OPINIO N THAT NO RELIEF SOUGHT BY THE ASSESSEE IN THE APPEAL [ I.E, AGAINST THE ADDITION OF TOTAL INCOME OF RS. 8, 10,000/- (SUPRA) ] CAN BE ALLOWED AND FURTHER ACCORDING TO HIM, IN R ESPECT OF THE ENHANCEMENT OF INCOME HE WAS OF THE OPINION THAT THE NATURE AND SOURCE OF THE CREDIT IN THE BANK ACCOUNT AGGREGATING RS. 93,99,312/- HAS NOT BEEN SA TISFACTORILY EXPLAINED BY THE ASSESSEE. SO ACCORDING TO HIM THE ASSESSEE HAS FAIL ED TO SUBSTANTIATE THE INCOME FROM BUSINESS OF PLYING VEHICLE (MINI TRUCK) AS WEL L AS FROM THE BUSINESS OF TRADING OF POTATO/ONION. SO HE TREATED THE ENTIRE CREDITS O F THE ASSESSEE TO THE TUNE OF RS. 93,99,312/- IN HIS SAVING BANK ACCOUNT WHICH INCLUD ED CASH DEPOSIT OF RS. 82,06,499/- AS CASH CREDIT U/S 68 OF THE ACT AND M ADE AN ADDITION OF RS. 85,89,312/- (RS. 93,99,312 - RS. 8,10,000) AND HAS ALSO GIVEN CERTAIN OTHER DIRECTIONS ALSO TO THE AO . THEREAFTER HE ALSO INITIATED PENALTY U/S 2 71(1)(C ) OF THE ACT AND PASSED THE IMPUGNED QUANTUM ORDER. 5. AGGRIEVED BY THE AFORESAID ORDER OF THE LD. CIT( A) THE ASSESSEE HAS PREFERRED AN APPEAL AGAINST THE QUANTUM ASSESSMENT WHICH IS NUMBERED AS ITA NO. 445/GAU/2019, AND AGAINST THE PENALTY U/S 271(1)(C ) APPEAL IS NUMBERED AS ITA NO. 446/GAU/2019 [ THE AO PASSED PENALTY ORDER U/S 271(1)(C ) BY ORDER FIRST VIDE ORDER DATED 17.08.2017 AT RS. 90,000/- AND IN ADDIT ION TO THE SAID PENALTY, THE LD. CIT(A) VIDE THE IMPUGNED PENALTY ORDER DATED 23.09. 2019 AFTER COMPUTATION OF IT MADE BY AO LEVIED RS. 26,34,138/-ALSO ]. BOTH THE APPEALS ARE HEARD TOGETHER. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS. WE NOTE THAT THE ASSESSEE HAS FILED RETURN OF INCOME SHOWING TOTAL I NCOME OF RS. 2,331,410/-. THE 4 ITA NO. 445&446/GAU/2019 MANOJ SAHU, AY. 2015-16 ASSESSEES CASE WAS SELECTED FOR SCRUTINY THROUGH C ASS FOR EXAMINATION OF CASH DEPOSIT IN HIS BANK ACCOUNT. THE ASSESSEE HAS NOT F ILED ANY PAPER BOOK BEFORE US THOUGH IT HAS FILED BOTH THE APPEALS. WHILE GOING T HROUGH THE ASSESSMENT ORDER WE FIND INTER ALIA CERTAIN CONTRADICTION IN THE OBSERV ATIONS MADE BY THE AO AND THE COMPUTATION OF INCOME REPRODUCED BY THE AO LIKE AT PAGE 2 OF ASSESSMENT ORDER, THE AO IS STATING THAT IN THE COMPUTATION OF INCOME , THE ASSESSEE HAS SHOWN TOTAL INCOME WHEREIN HE QUOTES NET INCOME FROM PLYING OF MINI TRUCK U/S 44AE OF RS . 90,000/- . THEREAFTER IN PARA 3 THE AO NOTES THAT THE ASSES SEE HAS NOT SHOWN INCOME FROM MINI TRUCK U/S 44AE IN HIS RETURN MENTIONING S ECTION 44AE OF THE ACT. AT PARA 4 OF THE ASSESSMENT ORDER THE AO STATES THAT THE AM OUNT DEPOSITED/CREDITED IN THE BANK IS TO THE TUNE OF RS. 99,99,312/-, BUT THE AO NOTES IN PARA 6 THAT THE TOTAL CASH DEPOSITS DURING THE YEAR IS TO THE TUNE OF RS. 82,0 6,499/-. THUS THERE ARE CONTRADICTIONS WHICH NEED TO BE RECONCILED/EXPLAINE D. AND NON-FILING OF PAPER BOOK HAS HANDICAPPED US FROM LOOKING INTO THE CORRECTNES S OF THE FINDINGS RECORDED BY AO & LD. CIT(A). FURTHER AT PARA 8 OF HIS ORDER THE AO NOTES THAT THE ASSESSEE HAS NOT SHOWN ANY INCOME FROM THE VEHICLE INITIALLY IN HIS RETURN OF INCOME AND THAT THE ASSESSEE HAD SHOWN NET PROFIT FROM POTATO BUSINESS TO THE TURN OF RS. 1,45,410/- U/S 44AE OF THE ACT. THE AO NOTES THAT WHEN THE ASSESSE E WAS ASKED TO EXPLAIN THE CASH DEPOSITS THEN THE ASSESSEE OFFERED AN EXPLANAT ION THAT IT IS THE FREIGHT AMOUNTS FROM THE MINI TRUCK (CAMPER) WHICH WAS DEPOSITED TO THE TUNE OF RS. 75,81,840/- WHICH EXPLANATION WAS NOT FOUND TO BE ACCEPTABLE TO HIM BECAUSE ACCORDING TO HIM, THAT WILL TANTAMOUNT TO AN AVERAGE INCOME TO THE TU NE OF RS. 6,31,807/- MONTHLY WHICH IS UN-BELIEVABLE AND THAT TOO WHEN THE ASSESS EE HAS OFFERED ONLY RS. 90,000/- ON PRESUMPTIVE BASIS U/S 44AE OF THE ACT FROM SUCH AN INCOME YIELDING TRUCK; FURTHER ACCORDING TO THE AO THE ASSESSEE COULD HAVE DERIVED FROM FREIGHT OF RS. 5 LACS THIS INCOME OF RS. 90,000/- THEREFORE HE DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND THEREFORE HE WAS OF THE OPINION (IMPLI ED BY US) THAT THE INCOME/ GROSS FREIGHT AMOUNT OF RS. 75,81,840/- WAS AN AFTER-THO UGHT TO EXPLAIN/COVER THE DEPOSIT OF CASH IN THE BANK ACCOUNT; AND THUS THE AO CONCLU DED THAT THE ASSESSEE HAS SUPPRESSED HIS INCOME FROM THE ONLY BUSINESS OF PO TATO/ONION TO THE TUNE OF RS. 72 LACS AND THEREFORE IN ORDER TO DETERMINE THE INCOME OF THE ASSESSEE, HE RESORTED TO 5 ITA NO. 445&446/GAU/2019 MANOJ SAHU, AY. 2015-16 ESTIMATION OF THE INCOME AND APPLIED FLAT RATE OF 8% ON IT (RS. 72 LACS), THUS MAKING AN ADDITION OF RS. 7,20,000/- FROM THE BUSIN ESS OF POTATO/ONION AND ALSO ADDED INCOME FROM GOOD CARRIAGES OFFERED BY ASSESSE E AT RS. 90,000/- U/S 44AE OF THE ACT. THUS COMPUTING TOTAL INCOME OF ASSESSEE AT RS. 8,10,000/- (RS. 7,20,000/- + RS. 90,000). ON APPEAL THE LD. CIT(A) HAS ENHANCE D THE AMOUNT TO RS. 85,89,312/- AS DISCUSSED (SUPRA) WHICH IS NOT REPEA TED FOR THE SAKE OF BREVITY. 7. WE NOTE THAT THE ASSESSEES CASE IS THAT HE IS I NTO THE BUSINESS OF POTATO/ONION/GROCERY AND HAS OFFERED PRESUMPTIVE TA X U/S 44AE OF THE ACT SINCE HE IS NOT MAINTAINING ANY BOOKS OF ACCOUNTS. ACCORDING TO THE ASSESSEE, HE HAS GROSS RECEIPT FROM THIS BUSINESS TO THE TUNE OF RS. 18,17 ,625/- AND THEREFORE HE HAS OFFERED PRESUMPTIVE TAX OF RS. 1,45,410/- WHICH IS 12.5% OF THE GROSS RECEIPT. THIS INCOME OF THE ASSESSEE FROM POTATO/ONION/GROCERY NEED TO B E ACCEPTED SINCE IT HAS BEEN BROUGHT TO OUR NOTICE THAT THE ASSESSEE HAS BEEN CO NSISTENTLY ASSESSED IN THE EARLIER ASSESSMENT YEARS ALSO THE INCOME FROM THIS BUSINESS AND THEREFORE THE SAME TO BE ACCEPTED FROM THIS BUSINESS I.E. RS. 1,45,410/-. TH EREFORE WE ORDER ACCORDINGLY. 8. COMING TO THE INCOME FROM PLYING OF MINI TRUCK I S CONCERNED WE NOTE THAT PRESUMPTIVE TAXATION U/S 44AE OF THE ACT IS FOR THE ASSESSEE WHO OWNS NOT MORE THAN TEN (10) GOOD CARRIAGES AND IS ENGAGED IN THE BUSINESS OF PLYING/HIRING VEHICLE OF SUCH GOODS CARRIAGES WHEREIN THE BUSINESS INCOME FROM THE SAME IS CHARGEABLE TO THE TAX UNDER THE HEAD PROFIT AND GAINS OF THE BUS INESS OR PROFESSION SHALL BE DEEMED TO BE THE INCOME OF THE PROFIT AND GAINS FRO M ALL THE GOODS CARRIAGES OWNED BY HIM WHEN IT IS COMPUTED AS PER SUB-SECTION (2) O F SECTION 44AE OF THE ACT. HERE IN THE PRESENT CASE, THE ASSESSEE HAS CLAIMED TO HA VE RECEIVED FREIGHT TO THE TUNE OF RS. 75,81,840/- WHICH FACT HAS NOT BEEN BELIEVED/ ACCEPTED BY THE AO ON THE REASONS DISCUSSED (SUPRA) AND THE LD. CIT(A) HAS BA SED HIS DISBELIEF ON THE PREPONDERANCE OF PROBABILITY. BE THAT AS IT MAY BE, WE ALSO CONCUR TO THIS OBSERVATION MADE BY AUTHORITIES BELOW BECAUSE IT IS NOT LOGICAL TO BELIEVE THAT A MINI TRUCK WILL BE ABLE TO GENERATE GROSS INCOME OF RS. 75,81,840/- WHICH WOULD FETCH AN AVERAGE RECEIPT OF RS. 6,31,280/- MONTHLY . SO THE ACTION OF THE AUTHORITIES 6 ITA NO. 445&446/GAU/2019 MANOJ SAHU, AY. 2015-16 BELOW NOT TO ACCEPT THE GENUINETY OF GROSS RECEIPT FROM FREIGHT OF RS. 75,81,840/- FROM A MINI TRUCK IS A PLAUSIBLE VIEW. THE LD. CIT( A) FOR WANT OF ANY PROOF IN RESPECT OF THE CREDIT ENTRY IN THE BANK ACCOUNT HAS MADE ADDITION U/S 68 OF THE ACT WITHOUT GIVING ANY CONSIDERATION TO THE DEBIT/WITHD RAWAL OF THE MONEY. SO THE ACTION OF THE LD. CIT(A) ON THIS SCORE CANNOT BE PE R-SE COUNTENANCED. AND IT IS EQUALLY INTERESTING TO NOTE THAT BOTH AO/LD. CIT(A) HAS ACCEPTED THE PRESUMPTIVE TAX FROM MINI TRUCK OFFERED BY ASSESSEE AT RS. 90,0 00/- U/S 44AE OF THE ACT WHICH MEANS THE AUTHORITIES BELOW HAS ACCEPTED THAT THE A SSESSEE IS IN TO THE BUSINESS OF PLYING VEHICLE AND ELIGIBLE FOR ADOPTING PRESUMPTIV E TAX U/S 44AE OF THE ACT WHICH ACTION WE ALSO CONCUR/CONFIRM. THEREFORE WE ORDER A CCORDINGLY. 9. NOW WHAT REMAINS IS IN RESPECT OF CASH DEPOSITS IN THE ASSESSEES BANK ACCOUNT AS DEPICTED IN THE CHART GIVEN BY THE AO AT PAGE 3 OF THE ASSESSMENT ORDER. IT GOES WITHOUT SAYING THAT WHEN THERE IS CASH DEPO SITS IN HIS ACCOUNT, HE IS DUTY BOUND TO EXPLAIN THE NATURE AND SOURCE OF THE DEPOS ITS IN IT DURING THE PROCEEDINGS BEFORE THE AO. BE THAT AS IT MAY BE, REASONABLE EST IMATION OF THE INCOME OF THE ASSESSEE NEED TO BE MADE ON THE CASH DEPOSIT/WITHDR AWAL MADE IN THE ASSESSEES BANK ACCOUNT. THEREFORE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMAND TO THE AO FOR ESTIMATION OF INCOME IN RESPECT OF THE SUMS DEPOSITED. FOR THAT THE AO TO CONSIDER THE WITHDRAWN AMOUNT ALSO AND AFTER ALLOCA TION OF REASONABLE GROSS RECEIPT FROM THE MINI-TRUCK AND TAKING IN TO CONSIDERATION RS. 18,17,625/- FROM GROCERY, REASONABLE ESTIMATION OF INCOME TO BE COMPUTED IN A CCORDANCE TO LAW. FOR THE AFORESAID EXERCISE, WE SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(A) AND REMAND THE MATTER BACK FOR THE LIMITED PURPOSE AS AFORE-ST ATED. THE ASSESSEE IS DIRECTED TO FILE WRITTEN SUBMISSION/DOCUMENTS TO SUBSTANTIATE H IS CLAIM AND THE AO TO GIVE AN OPPORTUNITY OF HEARING IF THE ASSESSEE AVAILS FOR I T. 10. COMING TO THE PENALTY APPEAL, IN THE LIGHT OF T HE AFORESAID DIRECTION OF OURS IN THE QUANTUM APPEAL, WE SET ASIDE THE IMPUGNED ORDER OF LD. CIT(A) AND DIRECT THE AO TO DE NOVO PROCEED ON THIS IN ACCORDANCE TO LAW AFTER HEARING THE ASSESSEE. 7 ITA NO. 445&446/GAU/2019 MANOJ SAHU, AY. 2015-16 11. IN THE RESULT, QUANTUM APPEAL OF THE ASSESSEE I S PARTLY ALLOWED FOR STATISTICAL PURPOSES AND PENALTY APPEAL IS ALLOWED FOR STATISTI CAL PURPOSE. ORDER IS PRONOUNCED IN THE OPEN COURT ON 28 TH OCTOBER, 2021. SD/- SD/- (A. T. VARKEY) (P. M. JAGTAP) JUDICIAL MEMBER VICE-PRESIDENT DATED: 28.10.2021 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. APPELLANT SHRI MANOJ SAHU, KHATOWAL GAON, P.O. -SOOTEA, BISWANATH-784175. 2 RESPONDENT ITO, WARD-1, TEZPUR 3. 4. 5. CIT(A)-GUWAHATI-1, GUWAHATI CIT- DR, ITAT, GAUHATI BENCH, GUWAHATI. / TRUE COPY, BY ORDER, SENIOR PVT. SECY./DDO/H.O.O ITAT, KOLKATA BENCHES, KOLKATA