ITO 22(3)(4), NAVI MUMBAI V. RAVI BANGAR, NAVI MUMBAI

ITA 4580/MUM/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62462 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 09-05-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 03-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A D ANWANI
• Section: 44AD; 69; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI D BENCH MUMBAI BENCHES, MUMBAI BEFORE SHRI VIJAY PAL RAO, JM & SHRI N K BILLAIYA, AM ITA NO. 4618/MUM/2010 (ASSESSMENT YEAR 2007-08 ) RAVI BHASKAR BANGAR FLAT NO. 605 - OM HARMONY PLOT N O. 15/1 SECTOR 11 KOPAR KHAIRNE NAVI MUMBAI VS THE INCOME TAX OFFICER 22(3)(4), MUMBAI (APPELLANT ) (RESPONDENT) & ITA NO. 4580/MUM/2010 (ASSESSMENT YEAR 2007-08 ) THE INCOME TAX OFFICER 22(3)(4), MUMBAI VS RAVI BHASKAR BANGAR FLAT NO. 605 - OM HARMONY PLOT N O. 15/1 SECTOR 11 KOPAR KHAIRNE NAVI MUMBAI (APPELLANT ) (RESPONDENT) PAN NO. AEOPB4944A ASSESSEE BY SH A D ANWANI REVENUE BY SH K R VASUDEVAN DT.OF HEARING 9 TH MAY 2012 DT OF PRONOUNCEMENT 25 TH , MAY 2012 ORDER PER VIJAY PAL RAO, JM THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER DATED 26.3.2010 OF THE COMMISSIONER OF INCOME TAX (APPEALS) FOR THE ASSESS MENT YEAR 2007-08. 2 BOTH THE ASSESSEE AS WELL AS THE REVENUE ARE AGGR IEVED BY THE IMPUGNED ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS) WH EREBY THE ADDITION MADE BY THE ASSESSING OFFICER U/S 69 OF THE I T ACT ON ACCO UNT OF BANK DEPOSITS OF RAVI BHASKAR BANGAR 2 ` 1,62,07,447/- WAS REDUCED BY THE COMMISSIONER OF I NCOME TAX(APPEALS) TO 10% OF THE SAID AMOUNT. ACCORDINGLY, COMMON ISSUE AROSE IN BOTH THESE APPEALS WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE COMMIS SIONER OF INCOME TAX(APPEALS) IS JUSTIFIED IN REDUCING THE ADDITION OF ` 1,62,07,447/- MADE BY THE ASSESSING OFFICER U/S 69 AND THEREBY GRANTING RELIEF OF ` 1,45,85,803/- AND SUSTAINING THE ADDITION ONLY TO THE EXTENT OF ` 16,20,645/-. 3 THERE IS A DELAY OF 4 DAYS IN FILING THE APPEAL B Y THE ASSESSEE. THE ASSESSEE HAS FILED AN APPLICATION/AFFIDAVIT AND PRAYED FOR C ONDONATION OF DELAY. 4 WE HAVE HEARD THE LD AR OF THE ASSESSEE AS WELL A S THE LD DR AND CONSIDERED THE AFFIDAVIT FILED BY THE ASSESSEE ON CONDONATION OF DELAY. THE DELAY IN FILING THE APPEAL IS DUE TO THE REASON OF THE PAYMENT OF COUR T FEE COULD NOT BE ARRANGED BY THE ASSESSEE ON THE DATE WHEN THE APPEAL WAS TO BE FILED. THEREFORE, THERE WAS A DELAY OF 4 DAYS INCLUDING SATURDAY AND SUNDAY BEIN G THE CLOSED DAYS IN BETWEEN. WE ARE SATISFIED WITH THE EXPLANATION OF THE ASSESS EE AND ACCORDINGLY, CONDONE THE DELAY OF 4 DAYS IN FILING THE APPEAL BY THE ASSESSE E. 5 THE ASSESSEE IS STATED TO HAVE BEEN DOING CIVIL C ONSTRUCTION CONTRACTS. HE HAS FILED RETURN OF INCOME FOR THE YEAR UNDER CONSIDERA TION U/S 44AD AND DECLARED A PROFIT OF ` 2,21,460/- ON A TURN OVER OF ` 25,42,600/-. AS PER THE AIR INFORMATION, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD DEP OSITED CASH OF ` 23,89,500/- IN THE SAVING BANK ACCOUNT WITH COSMOS CO-OP BANK LT D . THE CASE WAS SELECTED FOR SCRUTINY AND DURING THE COURSE SCRUTINY ASSESSMENT; THE ASSESSING OFFICER FURTHER NOTICED THAT THE ASSESSEE HAD DEPOSITED THE FOLLOWI NG AMOUNTS IN THE SB AC/C WITH COSMOS COOP BANK LTD: RAVI BHASKAR BANGAR 3 NAME OF THE BANK A/C NO. TOTAL DEPOSIT IN ` `` ` CASH DEPOSIT IN ` `` ` CASH WITHDRAWALS IN ` `` ` COSMOS COOP BANK LTD SB 230042 14043054 2389500 8953000 COSMOS COOP BANK LTGD CA 6033 105000 5000 - TAMIL NADU MERFCANTILE BAZNK SB 117100050300592 4402210 102200 205000 BANK OF BARODA SB 11035 107183 50000 40000 18657447 - - SINCE A SUM OF ` 24,50,000/- WAS FOUND AS NOT PERTAINING TO THIS AS SESSMENT YEAR, THE ASSESSING OFFICER MADE AN ADDITION OF ` . 1,62,07,447/- AS INCOME FROM OTHER SOURCES U/S 69 OF THE I T ACT. 5.1 ON APPEAL, THE COMMISSIONER OF INCOME TAX(APPEA LS) TREATED THE AMOUNT DEPOSITED IN THE BANK AS UNDISCLOSED BUSINESS DEPOS ITS AND THEREBY DIRECTED THE ASSESSING OFFICER TO DETERMINE THE PROFIT OF THE AS SESSEE @ 10% OF THE DEPOSITS OF ` 1,62,06,447/-. HENCE, THE COMMISSIONER OF INCOME T AX (APPEALS) HAS GRANTED RELIEF OF ` 1,45,85,803/- AND SUSTAINED THE ADDITION TO THE EX TENT OF ` 16,20,645/- 6 BOTH THE ASSESSEE AND THE REVENUE HAVE CHALLENGED THE IMPUGNED ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS). THE ASSES SEE IS AGGRIEVED BECAUSE THE COMMISSIONER OF INCOME TAX(APPEALS) HAS SUSTAINED THE ADDITION TO THE EXTENT OF 10% ON DEPOSITS AND ADDITION MADE BY THE ASSESSING OFFICER U/S 69 WHEREAS THE REVENUE IS AGGRIEVED FOR THE RELIEF GRANTED BY THE COMMISSIONER OF INCOME TAX(APPEALS) BY REDUCING THE ADDITION. 7 BEFORE US, THE LD AR OF THE ASSESSEE HAS SUBMITTE D THAT THE ASSESSING OFFICER HAS ACCEPTED THE PROFIT ADMITTED BY THE ASSESSEE U/ S 44AD IN THE EARLIER YEARS. HE HAS FURTHER SUBMITTED THAT THE ASSESSING OFFICER HA S TAKEN THE ENTIRE BANK DEPOSITS AS INCOME OF THE ASSESSEE FROM OTHER SOURCES AND MADE THE ADDITION U/S 69 OF THE ACT WITHOUT TAKING INTO CONSIDERATION THE WITHDRAWALS M ADE BY THE ASSESSEE. THE LD AR RAVI BHASKAR BANGAR 4 HAS FURTHER SUBMITTED THAT THE CASH DEPOSITS RECORD ED IN THE BANK STATEMENT CANNOT BE TREATED AS UNEXPLAINED U/S 69 OF THE I T ACT. TH IS AMOUNT, IN THE BANK ACCOUNT REPRESENTS THE ADVANCE RECEIVED BY THE ASSESSEE FRO M VARIOUS PARTIES FOR THE PURCHASE OF PLOT OF LAND AND THE WITHDRAWALS IS T HE AMOUNT WHICH IS RETURNED BY THE ASSESSEE TO THE PARTIES. THEREFORE, THE TRANSA CTIONS IN THE BANK ACCOUNT ARE RELATED TO THE BUSINESS OF THE ASSESSEE. HE HAS FU RTHER SUBMITTED THAT THE ASSESSEE HAS PRODUCED THE CONFIRMATION TO THE EXTENT OF ` 80,75,000/- WITH REGARD TO THE TRANSACTIONS WITH ONE SHRI SUNIL GULATI. HE HAS PO INTED OUT THAT THE CIT(A) HAS ALSO TAKEN NOTE OF THIS CONFIRMATION OF TRANSACTIONS IN PARA 3.1 OF THE IMPUGNED ORDER. THE LD AR HAS FURTHER POINTED OUT THAT THE ASSESSEE HAS ALSO FILED LEDGER ACCOUNT, COPY OF PAN IN RESPECT OF SHRI SANJAY PATIL AND PRA KASH CHANDAN . 7.1 ALTERNATIVELY, THE LD AR HAS SUBMITTED THAT SIN CE THE ASSESSEE IS AN ILLITERATE AND DOING THE BUSINESS ACTIVITY OF REAL ESTATE AS W ELL AS CIVIL CONTRACTS; THEREFORE, THE PROFIT ON THE ACTIVITY SHOULD BE ESTIMATED AT 8% AS PER SEC. 44AD. HE HAS FURTHER SUBMITTED THAT WHILE INCOME HAS TAKEN AS PER SEC 44 AD, THE RETURNED INCOME DECLARED BY THE ASSESSEE SHOULD BE ADJUSTED. 7.2 THE LD DR, ON THE OTHER HAND HAS SUBMITTED THAT THE ASSESSEE HAS FAILED TO PRODUCE ANY EVIDENCE TO SHOW THAT THE ASSESSEE IS A CIVIL CONTRACTOR AND THEREFORE, THE PROVISIONS OF SEC. 44AD ARE APPLICABLE. THE AD DITION U/S 69 HAS BEEN MADE BY THE ASSESSING OFFICER ON THE BASIS OF AIR INFORMATI ON AND THE CASH DEPOSITS WERE FOUND IN THE BANK ACCOUNT OF THE ASSESSEE. THE LD DR HAS FURTHER SUBMITTED THAT RECEIVING THE MONEY FOR PURCHASE OF PLOT OF LAND IS NOT AN ACTIVITY OF CIVIL CONTRACT; THEREFORE, THE PROVISIONS OF SEC. 44AD ARE NOT APPL ICABLE. THE ASSESSEE HAS NOT PRODUCED ANY AGREEMENT TO SHOW THAT THE MONEY RECEI VED IN THE BANK ACCOUNT IS IN RESPECT OF THE PURCHASE OF PLOT ON BEHALF OF THE PARTIES. THE PRIMARY ONUS IS ON THE RAVI BHASKAR BANGAR 5 ASSESSEE TO ESTABLISH THAT THE SAID MONEY DEPOSITED IN THE ACCOUNT WAS RECEIVED FOR THE PURCHASE OF PLOT. THE ASSESSEE FAILED TO PRODU CE THE CONCERNED PARTIES; THEREFORE, THE ADDITION IS JUSTIFIED AND THE COMMIS SIONER OF INCOME TAX(APPEALS) WITHOUT ANY MATERIAL IN SUPPORT OF THE CLAIM OF THE ASSESSEE HAS REDUCED THE ADDITION BY TAKING THE PROFIT AT 10% OF THE DEPOSIT S. 7.3 IN REBUTTAL, THE LD AR HAS SUBMITTED THAT THE A SSESSING OFFICER HAS NOT DISPUTED THE BUSINESS OF THE ASSESSEE AS CIVIL CONTRACT. EVE N IN THE EARLIER YEARS, THE RETURN FILED U/S 44AD WAS ACCEPTED BY THE ASSESSING OFFICER. 8 WE HAVE CONSIDERED THE RIVAL CONTENTION AND CAREF ULLY PERUSED THE RELEVANT MATERIAL ON RECORD. THE ASSESSING OFFICER NOTICED T HAT THE ASSESSEE HAD DEPOSITED IN THE BANK AN AMOUNT OF ` . 1,86,57,447 OUT OF WHICH ` . 24,50,000/- WAS FOUND TO BE NOT PERTAINING TO THE YEAR UNDER CONSIDERATION. THEREFO RE, AFTER REDUCING THE AMOUNT OF ` . 24,50,000/- THE ASSESSING OFFICER MADE AN ADDITI ON OF ` . 1,62,07,447/- U/S 69 OF THE ACT. 8.1 AS IT IS EVIDENT FROM THE DETAILS OF THE DEPOSI TS AND WITHDRAWALS THAT PART OF THE DEPOSITS IS IN CASH AND PART IS IN CHEQUE; WHER EAS THE CORRESPONDING WITHDRAWAL IS ALSO THERE. THE ASSESSING OFFICER HAS NOT TAKEN INTO CONSIDERATION THE WITHDRAWAL MADE BY THE ASSESSEE FOR SUBSEQUENT DEPOSITS IN THE ACCOUNT. THEREFORE, MAKING ADDITION ON THE BASIS OF ONE SIDE OF THE BANK ACCOU NT IS NOT JUSTIFIED WITHOUT GIVING THE DUE ADJUSTMENT OF CASH WITHDRAWALS BY THE ASSES SEE IN BETWEEN. FURTHER, THE CIT(A) HAS RECORDED THAT THE TRANSACTION OF ` . 80,75,000/- WITH SHRI SUNIL GULATI HAS BEEN CONFIRMED BY THE PARTY. FURTHER, IN RESPECT OF THE TRANSACTION WITH SHRI SANJAY PATEL AND SHRI PRAKASH CHANDRAN, THOUGH THE ASSESSE E FILED THE LEDGER ACCOUNT, COPY OF PAN OF THE SAID PERSON; BUT DID NOT FILE TH E COPY OF THE RETURN OF INCOME RAVI BHASKAR BANGAR 6 ALONG WITH BANK ACCOUNT ETC.; THEREFORE, THE CIT(A) DID NOT ACCEPT THE SAID TRANSACTION AS DULY CONFIRMED. 8.2 IT IS CLEAR FROM THE RECORD THAT THE ASSESSEE B Y PRODUCING THE MATERIAL HAS DEMONSTRATED THAT THESE RECEIPTS IN THE BANK ACCOU NT OF THE ASSESSEE ARE RELATING TO ITS ACTIVITY OF REAL ESTATE AND FOR THE PURPOSE OF PURCHASING THE PLOT AND THEN AGAIN RETURNED THE AMOUNT TO THE PARTIES. THEREFO RE, THIS ACTIVITY OF REAL ESTATE IS NOT IN THE NATURE OF CIVIL CONTRACT AND THEREFORE, PROV ISIONS OF SEC 44AD ARE NOT APPLICABLE SO FAR AS THE DEPOSITS IN THE BANK ACCO UNT. 9 HAVING REGARDS TO THE FACTS THAT THE RECEIPT IN T HE BANK ACCOUNT ARE IN RELATION TO THE BUSINESS ACTIVITY OF THE ASSESSEE, WE FIND THAT THE CIT(A) IS JUST AND PROPER IN ESTIMATING THE PROFIT OF THE SAID ACTIVIT Y AT 10% OF THE DEPOSITS PERTAINING TO THE YEAR UNDER CONSIDERATION I.E. ` . 1,62,06,447/-. 10 IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE IMPUGNED ORDER OF THE LD CIT(A), QUA THIS ISSUE. 11 IN THE RESULT, THE APPEAL FILED BY THE REVENUE A S WELL AS THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON THIS 25 TH , DAY OF MAY 2012 SD/ S D/- ( N K BILLAIYA ) ACCOUNTANT MEMBER ( VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED:25 TH , MAY 2012 RAJ* RAVI BHASKAR BANGAR 7 COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI