DCIT 22(3), NAVI MUMBAI V. ANIL SHAMBHU RAJPUT, NAVI MUMBAI

ITA 4491/MUM/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3743 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 16-02-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 03-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Rectification of order; Peak credit
• Section: 44AD; 143(3); 133A; 148; 154

Judgement Text

1 IN THE INC OME TAX APPELLATE TRIBUNAL MUMBAI BENCH A , MUMBAI BEFORE SHRI AMIT SHUKLA , J UDICIAL M EMBER AND SHRI RAJESH KUMAR, ACCOUNTANT M EMBER ITA NOS. 4491 & 4492/MUM/2011 (ASSESSMENT YEARS : 2005 - 06 & 2006 - 07) DCIT - 22(3), NAVI MUMBAI ( APPELLANT ) VS. SHRI ANIL SHAMBHU RAJPUT B - 602, SECTOR 9, MATRUCHAYA COMPLEX, AIROLI, NAVI MUMBAI. PAN : ADCPR7829M ( RESPONDENT ) APPELLANT BY : SHRI YOGESH KAMAT RESPONDENT BY : SHRI VIJAY MEHTA DATE OF HEARING : 16/02/2016 DATE OF PRONOUNCEMENT : 11 /05/2016 ORDER PER RAJESH KUMAR, A.M : THE ABOVE APPEALS ARE FILED BY THE REVENUE AGAINST THE ORDERS OF CIT(A) - 33, MUMBAI , BOTH DATED 25.3.2011 FOR THE ASSESSMENT YEARS 2005 - 06 AND 2006 - 07 WHICH IN TURN HAS ARISEN OUT OF THE ORDERS PASSED BY THE ASSESSING OFFICER DATED 31.12.2007 AND 31.12.2008 RESPECTIVELY. ITA NO 4491/M/2011 : - 2. THE BRIEF FACTS OF THE ASSESSEE ARE THAT HE FILED HIS RETURN OF INCOME ON 29.03.2006 SHOWING AN INCOME OF RS. 1,48,830/ - .THE SAID RETURN WAS 2 SHRI ANIL SHAMBHU RAJPUT ITA NOS. 4491 & 4492/MUM/2011 PROCESSED U/S 143(1) OF THE ACT ON 24.11.2006. THEREAFTER THE CASE OF THE ASSESSEE WAS RE - OPENED BY ISSUING NOTICE U/S 148 OF THE ACT DATED 28.03.2007 FOLLOWING A SURVEY U/S 133A ON THE BUSINESS PREMISES OF THE ASSESSSEE ON 12.03.2007 DURING WHICH THE ASSESSEE WAS FOUND TO HAVE DEPOSITED INTO THREE CURRENT ACCOUNTS WITH VEERASHAIVA COOP BANK LTD TO THE TUNE OF RS. 67, 53,924/ - .THE ASSESSMENT IN THE RE - OPENED PROCEEDINGS WAS COMPLETED BY ORDER DATED 31.12.2007 PASSED U/S 143(3) R.W.S.147 OF THE ACT AT RS. 75,90,60/ - BY MAKING VARIOUS DISALLOWANCES INCLUDING THE (I) OF RS. 18,60,400/ - ON ACCOUNT OF REJECTION OF APPLICA TION OF PROVISIONS OF SECTION 44AD AND THUS TREATING THE ENTIRE CONTRACT RECEIPTS AS INCOME FROM UNEXPLAINED SOURCES (II) UNDISCLOSED CASH DEPOSITS OF RS. 11,10,220/ - AND UNEXPLAINED CASH CREDIT IN BANKS OF RS. 16,55,000/ - WHICH ARE THE SUBJECT MATTER OF THE PRESENT APPEAL BEFORE US. 3. THE ISSUE RAISED IN THE FIRST GROUND OF APPEAL IS AGAINST THE DELETION OF RS. 18,60,000/ - BY UPHOLDING BY THE COMMISSIONER (APPEALS) THAT THE PROVISIONS OF SECTION 44AD OF THE ACT WERE APPLICABLE TO THE ASSESSEE AGAINST T HE OBSERVATION OF THE AO THAT THE PROVISIONS OF SECTION 44AD OF THE ACT WERE WRONGLY USED TO FILE RETURN OF INCOME WHEREAS AS A MATTER OF FACT THE ASSESSEE COULD NOT PROVE THE PERSONS FROM WHOM THE CONTRACTS RECEIPTS WERE RECEIVED AND THAT TOO WITHOUT DEDU CTION OF TAX AT SOURCE. THE LD AO ADDED THE ENTIRE CONTRACT RECEIPTS OF RS. 18,60,400/ - WITHOUT ALLOWING ANY EXPENSES ON THE GROUND THAT NO CREDIBLE EVIDENCE WAS PRODUCED BY THE ASSESSEE TO PROVE HIS CLAIM AND BY CITING VARIOUS REASONS SUCH AS ABSENCE OF P ROOF OF PAYMENT OF LABOUR CHARGES, NOT PROVING THAT ASSESSEE WAS A PETTY CONTRACTOR, NON DEDUCTION OF TAX AT SOURCE BY THE PAYERS . 3 SHRI ANIL SHAMBHU RAJPUT ITA NOS. 4491 & 4492/MUM/2011 3.1. THE LD CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE FILED DURING THE C OURSE OF HEARING BY HOLDING THAT THE ASSESSEE WAS A PETTY CONTRACTOR AND RETURNS OF THE ASSESSEE FILED IN THE EARLIER YEARS U/S 44AD WERE ACCEPTED BY THE DEPARTMENT . THE CIT(A) ALSO CONSIDERED THE REMAND REPORT CALLED OF THE AO WHIC H IS INCORPORATED BY THE CIT(A) ON PAGE NO 4 TO 6 THE APPEAL ORDER. THE RELEVANT FINDINGS OF THE LD CIT(A) IS REPRODUCED AS UNDER: - THEN FOR REJECTING INCOME RETURNED U/S. 44AD AND MAKING THE ADDITION OF TOTAL GROSS RECEIPTS OF RS.18,60,400/ - THE ASSESSING OFFICER HAS GIVEN THE REASON THAT NO TAXES HAS BEEN DEDUCTED BY THE PARTIES FOR WHOM THE APPELLANT IS CLAIMING TO HAVE DONE THE JOB. I FIND THIS VIEW IS NOT TENABLE AS FOR ASSESSMENT YEAR 2005 - 06 THE INDIVIDUALS WERE NOT OBLIGATED TO DEDUCT THE TDS U/S. 194C(1)(K) WHICH CA ME W.E.F. 01.06.2007 AND HENCE DID NOT EXIST THEN. IT IS ALSO ON RECORD THAT THESE PARTIES ARE INDIVIDUALS FOR WHOM APPELLANT IS CLAIMING TO HAVE DONE THE JOB. IN VIEW OF THIS, THE ASSESSING OFFICER IS NOT JUSTIFIED TO CONCLUDE THAT THE APPELLANT IS NOT HAVING A BUSINESS ACTIVITY OF PETTY CIVIL CONTRACT WORK WHEN DURING SURVEY ITSELF APPELLANTS STATE OF AFFAIRS SHOWED IT SO AND DECLARATIONS WERE OBTAINED FOR RS.11,00,000/ - FOR ASSESSMENT YEAR 2005 - 06. THEN THERE IS NO FINDINGS MADE BY ASSESSING OFFICER CONSEQUENT TO SURVEY TO CONTROVERT THE SAME. THE APPELLANT HAS BEEN FILING RETURN IN EARLIER YEAR ALSO IN SAME STATUS AVAILING BENEFIT U/S. 44AD AVAILABLE TO CIVIL CONSTRUCTION BUSINESS. HENCE THE ADDITION OF RS.18,60,400/ - IS NOT SUSTAINABLE ON THIS ACC OUNT ALSO. 3.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RELEVANT MATERIALS ON RECORDS. WE FIND FROM THE ORDER S OF AUTHORITIES BELOW AND OTHER RECORDS PERUSED BY US THAT THE ASSESSEE HAD BEEN FILING THE RETURN OF INCOME @ 8% OF GROSS RECEIPT UNDER PRESUMPTIVE TAX SCHEME AS PROVIDED U/S 4 SHRI ANIL SHAMBHU RAJPUT ITA NOS. 4491 & 4492/MUM/2011 44AD OF THE ACT UNDER . UNDER THE SAID SECTION THE ASSESSEE WAS NOT SUPPOSED TO MAINTAIN ANY BOOKS OF ACCOUNTS QUA THE SAID BUSINESS. THE DEPARTMENT HAS ALSO ACCEPTED THE RETURNS OF THE A SSESSEE AS FILED U/S 44AD OF THE ACT IN EARLIER YEARS . THE AO HAS DURING THE YEAR REJECTED THE FILING OF RETURN BY APPLICATION OF SECTION 44AD TO THE ASSESSEE FOR THE REASONS SUCH AS NO TDS WAS DEDUCTED BY THE PAYER , ABSENCE OF ANY PROOF THAT ASSESSEE WA S A PETTY CONTRACTOR . WE FURTHER FIND THAT FINDINGS OF THE AO WERE RIGHTLY CONTROVERTED BY THE FINDINGS OF THE CIT(A) THAT PROVISIONS OF SECTION 44AD CAME INTO BEING W.E.F. 1.6.2007 AS THE ASSESSEE HAS RECEIVED THE PAYMENTS FROM PERSONS WHO WERE INDIVI DUALS AS STATED BY THE AO IN THE REMAND REPORT . IN OUR OPINION THE AO HAS NEITHER BROUGHT ON RECORDS ANY SUBSTANTIVE PROOF NOR ANY EVIDENCE TO PROVE THAT THE ASSESSEE WAS NOT A PETTY CONTRACTOR. ON THE BASIS OF ABOVE FACTS , WE FIND THAT THERE IS NO INFIRMITY IN THE ORDER OF CIT(A) LEGAL OR OTHERWISE AND WE ACCORDINGLY , DISMISS THE APPEAL OF THE REVENUE ON THIS GROUND BY UPHOLDING THE ORDER OF CIT(A) . 4. THE ISSUE RAISED IN THE SECOND GROUND OF APPEAL IS AGAINST THE SUSTAINING THE RS. 10,88,488/ - ONLY BY CIT(A) OUT OF ADDITIONS MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS OF RS. 11,10,220/ - AND UNEXPLAINED CREDITS OF RS. 16,55,000/ - INTO THREE ACCOUNTS WITH VEERASHAIVA COOP BANK LTD AND DELETING THE REMAINING WITHOUT ANY SUBSTANTIVE RE ASON OR FINDINGS THEREFOR . 4.1. THE LD AO ADDED A SUM OF RS. RS. 11,10,220/ - ON ACCOUNT OF UNEXPLAINED CASH RECEIPTS FOR THE REASON THAT NO CONFIRMATIONS OR ANY OTHER EVIDENCE WAS PRODUCED BY THE ASSESSEE TO THE PROVE THE SAID CASH DEPOSITS BY REJECTING THE SUBMISSIONS OF THE ASSESSEE THAT THESE WERE RECEIVED AS REFUND OF 5 SHRI ANIL SHAMBHU RAJPUT ITA NOS. 4491 & 4492/MUM/2011 ADVANCES GIVEN IN THE EARLIER YEARS AS INCORPORATED IN PARA 7 OF THE ASSESSMENT ORDER. SIMILARLY RS. 16,55,000/ - WAS FOUND TO HAVE BEEN CREDITED IN THE THREE BANK ACCOUNTS AS DETAILED IN PARA 8 OF THE ASSESSMENT ORDER AND ADDED TO THE INCOME IN ABSENCE OF ANY BOOKS OF ACCOUNTS AND CORROBORATING MATERIALS TO THE CONTRARY. THE LD CIT(A) SUSTAINED THE ADDITIONS TO THE TUNE OF RS. 10,88,488/ - BY PARTLY ALLOWING THE APPEAL ON THIS ISSUE BY FO LLOWING PEAK THEORY SYSTEM . THE LD CIT(A) ALLOWED THE PART RELIEF TO THE ASSESSEE BY SUBTRACTING THE AMOUNT OF RETURNED INCOME OF RS. 1,48,830/ - AND THE AMOUNT OF SURRENDER FROM THE CONSOLIDATED PEAK OF RS. 23,70,318 AS WORKED OUT ON THE BASIS OF THREE BA NK ACCOUNTS AND THE CASH SUMMARY AND ACCORDINGLY UPHELD THE ADDITIONS TO THIS EXTENT . 4.2. AFTER TAKING INTO ACCOUNT THE SUBMISSIONS OF THE RIVAL COUNSEL AND AFTER PERUSING THE RELEVANT MATERIALS PLACED BEFORE US INCLUDING THE ORDERS OF AUTHORITIES BELOW , WE FIND THAT THE PEAK BANK BALANCE OF ALL THE THREE BANK ACCOUNTS AS PER THE SUMMARY AS INCORPORATED ON PAGE 15 OF THE APPEAL ORDER IS RS. 8,72,868/ - ( 10 TH AUGUST 2004 ) . SIMILARLY THE PEAK CASH ON THE BASIS OF SUMMARY OF CASH AS INCORPORATED ON PAGE 15 AND 16 OF THE APPEAL ORDER WAS RS. 14,97,450/ - ( 28 TH AUGUST,2004 ) . THE SUM OF BOTH THE PEAK WORKS OUT TO RS. 23,70,318/ - . THE LD CIT(A) SUBTRACTED THE RETURNED INCOME OF RS. 1,48,830/ - AND AMOUNT OF DECLARATION DURING SURVEY OF RS. 11,00,000/ - AND SUSTAIN ED THE BALANCE OF RS. 10,88,488/ - WHICH IS A JUDICIOUS AND REASONABLE VIEW IN THE PRESENT CIRCUMSTANCES AND THE CASE BACKGROUND . IN VIEW OF THE FACTS AS DISCUSSED ABOVE, WE ARE OF THE OPINION THAT THE ORDER OF CIT(A) IS CORRECT AND DOES NOT REQUIRE ANY INT ERFERENCE AND ACCORDINGLY UPHELD ON THIS ISSUE BY DISMISSING THE APPEAL OF THE REVENUE. 6 SHRI ANIL SHAMBHU RAJPUT ITA NOS. 4491 & 4492/MUM/2011 ITA NO 4492/M/2011 : 5. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME ON 8 TH JUNE,007 DECLARING AN INCOME OF RS. 1,27,75,177/ - INCLUDING THE AMOUNT OF DECLARING OF RS. 1,26,00,000/ - MADE DURING SURVEY ACTION ON THE ASSESSEE ON 12.03.2007. THEREAFTER THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICES WERE IS SUED AND SERVED UPON THE ASSESSEE. ULTIMATELY THE ASSESSMENT WAS COMPLETED VIDE ORDER DATED 31.12.2008 PASSED U/S 143(3) OF THE ACT AT RS. 1,67,54,700/ - BY MAKING VARIOUS ADDITIONS AS INCORPORATED ON PAGE NO 8 OF THE ASSESSMENT ORDER INCLUDING THE ONES 6. THE REVENUE CHALLENGED THE ADMISSION OF APPEAL BY THE TRIBUNAL ON THE GROUND THAT THE CONDITIONS AS CONTEMPLATED BY THE PROVISIONS OF SECTION 249(4) OF THE ACT WERE NOT SATISFIED BEFORE FILING THE APPEAL. 6.1 . IN ORDER TO UNDERSTAND THE ISSUE RAISED B Y THE REVENUE WE SHALL FIRST REFER TO THE RELEVANT P ROVISIONS OF THE SAID SECTION OF THE ACT . UNDER THE PROVISIONS OF SECTION 249(4) , NO APPEAL SHALL BE ADMITTED UNLESS AT THE TIME OF FILING THE APPEAL , THE ASSESSEE HAS PAID THE DUE TAXES ON THE BASIS OF RETURN FILED BY HIM . IN THE EVENT OF NON FILING OF RETURN, THE ASSESSEE MUST HAVE PAID THE TAX EQUAL TO THE AMOUNT OF ADVANCE TAX PAYABLE BY HIM. 6.2 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS PLACED BEFORE US DURING THE C OURSE OF HEARING. THE LD AR FOR THE ASSESSEE STRONGLY OBJECT ED TO THE ARGUMENTS ADVANCED BY THE LD DR THAT THE ASSESSEE S TAXES AS THE RETURN OF INCOME FILED BY HIM WERE OUTSTANDING ON THE DATE OF FILING THE APPEAL BY PLACING BEFORE THE BENCH A COPY O F ORDER PASSED U/S 154 7 SHRI ANIL SHAMBHU RAJPUT ITA NOS. 4491 & 4492/MUM/2011 OF THE ACT DATED 30.6.2011 WHEREIN THE AO IN RESPONSE TO LETTER OF THE ASSESSEE DATED 08.06.2011 ALLOWED THE CREDIT OF TDS OF RS. 40,57,500/ - AS AGAINST RS. 11,15,543/ - ALLOWED EARLIER OF BY STATING THAT THE ASSESSEE CONTENTION WA S FOUND CORRECT. THUS IN VIEW OF THE ABOVE RECTIFICATION ORDER OF THE AO IT BECOMES AMPLY CLEAR THAT AMOUNT OF TAX AS PER THE RETURN OF INCOME WAS FULLY PAID AND THUS THE RAISED BY THE REVENUE BECOMES INFRUCTUOUS AND ACCORDINGLY DISMISSED. 7 . THE ISSUE R AISED IN THE 2 ND GROUND IS IDENTICAL TO THE ISSUE DECIDED BY IN ITA NO 4491/M/2011 AY 2006 - 06 AND THEREFORE OUR DECISION IN ITA NO 4491/M/2011 WOULD MUTATIS MUTANDIS APPLY TO THIS GROUND AS WELL. ACCORDINGLY THE GROUND NO 2 IS DISMISSED. 8 . THE ISSUE RAIS ED IN THE 3 RD GROUND WITHOUT PREJUDICE TO THE FOREGOING TWO GROUNDS IS THAT THE CIT(A) HAS WRONGLY ALLOWED RELIEF TO THE ASSESSEE ON VARIOUS DISCREPANCIES BY ALLOWING THE SAME TO BE COVERED BY THE AMOUNT OF DISCLOSURE OF RS. 1,26,00,000/ - MADE DURING SURVE Y ACTION .WE HAVE ALREADY DECIDED THE ISSUE IN GROUND NO 2 OF THIS APPEAL AND CONSEQUENTLY THE GROUND BECOMES ACADEMIC AND REQUIRES NO ADJUDICATION. 9 . IN THE RESULT, BOTH THE REVENUES APPEAL ARE DISMISSED ORDER PRONOUNCED IN THE OPEN COURT ON 11TH MAY , 201 6 SD SD ( AMIT SHUKLA ) JUDICIAL MEMBER ( RAJESH KUMAR ) ACCOUNTANT MEMBER MUMBAI, DATE : 11TH MAY , 2016 8 SHRI ANIL SHAMBHU RAJPUT ITA NOS. 4491 & 4492/MUM/2011 COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, A BENCH, MUMBAI 6) GUARD FILE BY ORDER TRUE COPY DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI