Shri Gopalbhai Gordhanbhai Gorasiya, RAJKOT-GUJARAT V. The Income Tax Officer, Ward-2(3), RAJKOT-GUJARAT

ITA 466/RJT/2012

• Counselvise Citation: 46624914 RSA 2012
• Duration Of Justice: 1 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 21-11-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 08-08-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR JAYANT B JHAVERI
• Assessee Lawyers: DR ADHIA
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBULAL, SMC BENCH, RAJKOT BEFORE SHRI T. K. SHARMA, JM ITA NO. 466/RJT/2012 ASSESSMENT YEAR : 2008-09 GOPALBHAI GORDHAN GORSIA SANT KABIR SOCIETY, HARI OM PAN STREET, PADAK ROAD, RAJKOT PAN : AGXPG 6945 R ( / APPELLANT) THE ITO, WARD-2(3) RAJKOT / RESPONDENT / ASSESSEE BY SHRI D.R. ADHIA, AR / REVENUE BY DR. JAYANT B. JHAVERI, DR / DATE OF HEARING 21.11.2013 !'# / DATE OF PRONOUNCEMENT 13.12.2013 / ORDER THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DA TED 31.05.2012 OF CIT(A)-III, RAJKOT CONFIRMING THE ADDITION OF 2,41, 146/- ON ACCOUNT OF UNEXPLAINED CASH DEFICIT MADE BY THE ASSESSING OFFICER U/S 143( 3) OF THE INCOME-TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2007-08. 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL, DOING PROPRIETARY BUSINESS IN TRADING OF SILVER ORNAMENTS. FOR THE AS SESSMENT YEAR UNDER APPEAL, HE FILED THE RETURN OF INCOME ON 10.10.2008 DECLARING TOTAL INCOME AT RS.1,17,042/-. THE ASSESSING OFFICER FRAMED ASSESSMENT U/S 143(3) OF THE INCOME-TAX ACT ON 03.12.2010, WHEREIN HE MADE ADDITION OF RS.2,41,146 /- FOR THE DETAILED REASON GIVEN IN THE ASSESSMENT ORDER WHICH READS AS UNDER:- I HAVE GONE THROUGH THE ABOVE WRITTEN SUBMISSION A S WELL AS THE VARIOUS DOCUMENTS PRODUCED BY THE ASSESSEE. IT IS SEEN FROM THE DETAILS THAT THE ASSESSEE HAS MADE PURCHASE OF RAW SILVER ORNAMENTS FROM THE VARIOUS PARTIES AND MADE PAYMENTS TO THESE PARTIES. HOWEVER, THE AS SESSEE HAS NOT RECORDED IN HIS BOOKS OF ACCOUNT THE TRANSACTIONS M ADE IN RETAIL TRADING OF SILVER ORNAMENTS. FURTHER, ON VERIFICATION OF THE D ETAILS OF THE TRANSACTIONS MADE IN THE BANK ACCOUNT WITH ICICI BANK (A/C NO.01 5301516282), IT IS NOTICED THAT THE HIGHEST CASH DEFICIT OF RS.2,41,14 6/- RECORDED ON 27.03.2008. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE WAS ASKED TO EXPLAIN THE REASONS FOR THE DEFICIT OF RS.2,41,146/ - ON 27.03.2008. HOWEVER, THE ASSESSEE HAS NOT GIVEN ANY SATISFACTORY EXPLANA TION REGARDING THE SAID CASH DEFICIT. CONSIDERING ALL THESE FACTS, THE ASSE SSEES ABOVE SUBMISSION REGARDING FOR ADOPTING THE GP DECLARED IS NOT ACCEP TABLE. FROM THE DETAILS OF BANK ACCOUNT FILED, IT IS NOTICED THAT THE ASSESSEE HAS MADE DEPOSITS IN THE BANK ACCOUNT OUT OF CASH PROCEEDS AND ALSO MADE WIT HDRAWALS FROM THE BANK ACCOUNT FOR MAKING PAYMENT TO THE PARTIES FROM WHOM THE PURCHASES ARE MADE, HENCE THE HIGHEST CASH DEFICIT OF RS.2,41,146 /- AS ON 27.03.2008 IS 2 466-RJT-2012 - GOPALBHAI GORDHAN GORSIA (SMC) TREATED AS UNEXPLAINED AND ADDED TO THE TOTAL INCOM E OF THE ASSESSEE. PENALTY PROCEEDINGS U/S 274 READ WITH SECTION 271(1)(C) OF THE ACT ARE INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND THE REBY CONCEALMENT OF INCOME. 3. ON APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE FI LED WRITTEN SUBMISSION DATED 26.04.2012 WHICH IS REPRODUCED AS UNDER:- 2. IN THIS CONNECTION I HAVE TO SUBMIT THAT THE AD DITION OF RS.2,41,146/- HAS BEEN MADE IN RESPECT OF CASH DEFICIT ON PEAK BASIS. IN FACT THE ASSESSEE HAS SHOWN GP AT 13.19% OF TURNOVER AT RS.3,85,630/- WHI CH HAS BEEN ACCEPTED BY THE LD. ITO WITHOUT ANY MODIFICATION. THUS, THE ACC OUNT OF THE ASSESSEE ARE FOUND IN ORDER. 3. NOW IN RESPECT OF AMOUNT OF RS.2,41,146/- IN RES PECT OF PEAK WORKING IT IS SUBMITTED THAT THE SAME RATIO OF 13.19% MAY KIND LY BE APPLIED AND ACCORDINGLY THAT AMOUNT MAY KINDLY BE DIRECTED TO B E ADDED AND BALANCE MAY BE DELETED. 4. ALTERNATIVELY AS MENTION AT PAGE NO.3 OF THE ASS ESSMENT ORDER THE ASSESSEE HAS STATED THAT 13.19% OF TOTAL TURNOVER W HICH COMES TO RS.1,47,992/- MAY KINDLY BE ADDED TAKING INTO CONSI DERATION THE PROVISIONS OF THE SECTION 44AF FOR RETAILED TRADERS SINCE ASSESSE E HAS ALSO ONE OF THE RETAILER AND BALANCE OF RS.93,154/- (2,41,146/- - 1 ,47,992/-) AND BALANCE MAY KINDLY BE DELETED. 5. THE ASSESSEE THEREFORE EARNESTLY PRAY YOUR HONOU R TO KINDLY REDUCED THE ADDITION OF RS.2,41,146/- AS MENTION AT PARA 3 AND 4 ABOVE SUITABLY ON ESTIMATED BASIS AND BE KIND ENOUGH TO DELETE THE BA LANCE ADDITION. AFTER CONSIDERING THE AFORESAID SUBMISSIONS, IN TH E IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE ADDITIONS FOR THE DETAILED REA SON GIVEN IN PARAGRAPH 4 WHICH READS AS UNDER:- 3. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND SU BMISSIONS OF APPELLANT. I FIND THAT APPELLANT HAS NOT CORRELATED THE CASH DEPOSITS IN BANK ACCOUNT NO.015301516282 OF APPELLANT IN ICICI BANK WITH SALES OF ANY SILVER ORNAMENT AT ALL. A VIEW SAMPLE PURCHASE BILLS WITHO UT EXACT CORRELATION WITH CORRESPONDING WITHDRAWALS PROVE NOTHING. QUITE A FE W WITHDRAWALS ARE MORE THAN RS.20,000/- AND IF IT IS PRESUMED THAT THESE W ITHDRAWALS RELATE TO PURCHASE THEN THE SAME WOULD BE DISALLOWABLE U/S 40 A(3) OF THE I.T. ACT. MOREOVER, THE SAMPLE BILLS OF PURCHASE COULD BE OF THE ACCOUNTED PURCHASES ALSO AND WITHOUT WRITING THE COMPLETE BOOK WITH EVI DENCE OF CASH SALE AND PURCHASE BILL WITH REFERENCE TO THE CASH DEPOSITS A ND CASH WITHDRAWALS FROM THE BANK A/C IN ICICI BANK, IT CANNOT BE PRESUMED T HAT THIS BANK ACCOUNT ENTRIES PERTAIN TO SILVER ORNAMENT TRADING BUSINESS . UNDER THESE CIRCUMSTANCES, I FIND THAT ASSESSING OFFICER HAS CO RRECTLY DETERMINED THE DEFICIT OF CASH FROM THE TOTAL CASH DEPOSITED BY AP PELLANT IN THIS BANK A/C IN EXCESS OF TOTAL CASH WITHDRAWN FROM THIS BANK ACCOU NT ON ANY GIVEN DATE AND FOUND OUT THE MAXIMUM DEFICIT AT RS.2,41,146/- ON 2 7.03.2008. ASSESSING OFFICER HAS CORRECTLY CONSIDERED THE SOURCE OF CASH OF RS.2,41,146/- DEPOSITED IN THIS BANK A/C AS UNEXPLAINED AND ADDED THE SAME TO THE TOTAL INCOME OF THE APPELLANT. I THEREFORE CONFIRM THE ADDITION MADE BY THE ASSESSING OFFICER. 3 466-RJT-2012 - GOPALBHAI GORDHAN GORSIA (SMC) AGGRIEVED WITH THE ORDER OF LD. CIT(A), THE ASSESS EE IS NOW IN APPEAL BEFORE THIS TRIBUNAL. 4. BEFORE THE TRIBUNAL, ON BEHALF OF THE ASSESSEE, SHRI D. R. ADHIA, AUTHORIZED REPRESENTATIVE, APPEARED AND POINTED OUT THAT ASSES SEE DEALS IN RETAIL TRADING OF SILVER ORNAMENTS AND HAS DISCLOSED GP AT 13.19%. T HE CLOSING BALANCE IN BANK ACCOUNT MAINTAINED WITH ICICI BANK WAS RS.3735/- AS POINTED OUT BY THE ASSESSING OFFICER IN PARAGRAPH 3 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER TREATED THE PEAK DEFICIT OF RS.2,41,146/- IGNORING THE FACT THA T THE ASSESSEE WAS HAVING CASH IN HAND ALSO OTHER THAN CASH WITHDRAWALS FROM THE BANK . IN SUPPORT OF THIS, HE PRODUCED BALANCE SHEET AS ON 31.03.2008 WHICH SHOWS CASH IN HAND AT RS.43,558/-. HE FURTHER TOOK US THROUGH THE RELEVANT PARAGRAPHS OF THE ASSE SSMENT ORDER WHEREIN THE ASSESSING OFFICER HAS ACCEPTED THAT THE DEPOSIT IN BANK ACCOUNT ARE OUT OF SALE PROCEED AND ALSO MADE WITHDRAWALS FOR MAKING PAYMEN T TO THE PARTIES FROM WHOM PURCHASES WERE MADE. HE SUBMITTED THAT GP DECLARED BY THE ASSESSEE IS 13.19%; THEREFORE, INSTEAD OF MAKING ADDITION OF PEAK, ADDI TION SHOULD BE RESTRICTED TO RS.1,47,992/- @ 13.19%. TO SUM-UP, HE POINTED OUT T HAT ADDITION BE RESTRICTED TO RS.1,47,992/- (13.19% OF RS.11,21,606/-) AND BALANC E AMOUNT OF RS.93,154/- (RS.2,41,146 RS.1,47,992) BE DELETED. 5. ON THE OTHER HAND, DR. JAYANT B. JHAVERI, DR, AP PEARED ON BEHALF OF THE REVENUE VEHEMENTLY SUPPORTED THE ORDER OF LD. CIT(A ). 6. HAVING HEARD BOTH SIDES, I HAVE CAREFULLY GONE T HROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT IN THE ASSESSMENT ORDER THE ASSESSING OFFICER ACCEPTED THAT THE ASSESSEE HAS MADE DEPOSIT S IN THE BANK ACCOUNT OUT OF SALE PROCEEDS (RS.11,21,606/-) AND ALSO MADE WITHDR AWALS FROM THE BANK ACCOUNT FOR MAKING PAYMENT TO THE PARTIES FROM WHOM THE PURCHAS ES WERE MADE (RS.9,20,260/-). WHILE WORKING OUT THE CASH IN HAND AVAILABLE, THE A SSESSING OFFICER HAS TAKEN INTO ACCOUNT THE CASH WITHDRAWAL FROM ONE BANK ACCOUNT N AMELY ICICI BANK BUT IGNORED THE OPENING CASH IN HAND AVAILABLE ETC. IN THE ABSE NCE OF MAINTENANCE OF BOOKS OF ACCOUNTS, INCOME IS REQUIRED TO BE ESTIMATED AS PER PROVISIONS CONTAINED IN SECTION 44AF OF THE INCOME-TAX ACT, 1961. BE THAT IT MAY BE , THE ASSESSEE HAS DECLARED GP 4 466-RJT-2012 - GOPALBHAI GORDHAN GORSIA (SMC) @ 13.19% AND ON THIS BASIS, THE GP ADDITION WORKS O UT TO RS.1,47,992/-. I AM, THEREFORE, OF THE VIEW THAT IT WILL MEET THE END OF JUSTICE IF ADDITION OF RS.2,41,146/- IS RESTRICTED TO RS.1,50,000/- AND BALANCE AMOUNT OF R S. 91,146/- (RS.2,41,146/- - RS.1,50,000/-) IS DELETED. I ACCORDINGLY CONFIRM T HE ADDITION TO THE EXTENT OF RS.1,50,000/- AND DELETE THE BALANCE ADDITION OF RS .91,146/-. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON THE DATE MEN TIONED HEREINABOVE. SD/- ( $.. &' / T. K. SHARMA) ( ) /JUDICIAL MEMBER *)& +) ,/ ORDER DATE: 13.12.2013 !$ /RAJKOT *BT / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT- GOPALBHAI GORDHAN GORSIA, SANT KABIR SOCIETY, HARI OM PAN STREET, PADAK ROAD, RAJKOT 2. / RESPONDENT- THE ITO, WARD-2(3), RAJKOT 3. ,0,1 * * 2 / CONCERNED CIT-II, RAJKOT 4. * * 2- / CIT (A)-III, RAJKOT 5 . 567 1, * 1#, !$ / DR, ITAT, RAJKOT 6 . 79 :; / GUARD FILE *)& / BY ORDER TRUE COPY PRIVATE SECRETARY, ITAT, RAJKOT