The Income-tax Officer, Jammu V. Sh. Gaurav Vermani, Jammu

ITA 468/ASR/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7717 (ITAT-AMRITSAR)
• Duration Of Justice: 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 05-09-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AMRIK CHAND
• Keywords: Unexplained investment; Business income
• Section: 143(3); 147; 148

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. NOS. 466, 467 & 468(ASR)/2011 ASSESSMENT YEARS:2004-05, 2005-06 & 2006-07 PAN:ADFPV9399D THE INCOME TAX OFFICER, VS. SH. GAURAV VERMANI, WARD 1(1), JAMMU. 138/4, SANJAY NAGAR, JAMMU. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. AMRIK CHAND, DR RESPONDENT BY:NONE DATE OF HEARING :02/05/2012 DATE OF PRONOUNCEMENT:07/05/2012 ORDER PER BENCH: THESE THREE APPEALS FILED BY THE REVENUE ARE DIRECT ED AGAINST THE CONSOLIDATED ORDER OF THE CIT(A), JAMMU DATED 30.06 .2011 FOR THE ASSESSMENT YEARS 2004-05, 2005-06 & 2006-07 RESPECT IVELY. SINCE THE ISSUES INVOLVED IN THESE APPEALS ARE COMMON, THESE WERE HE ARD TOGETHER AND THEREFORE, ARE BEING DISPOSED OF BY THIS CONSOLIDAT ED ORDER FOR THE SAKE OF CONVENIENCE. ITA NOS 466 TO 468 2 2. THE GROUNDS RAISED BY THE REVENUE IN ALL THESE A PPEALS ARE COMMON. HOWEVER, GROUNDS RAISED IN ITA NO.466(ASR)/2011 ARE REPRODUCED AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. CIT(A) WAS RIGHT IN TREATING THE DEPOSITS IN THE BANKS AS BUSI NESS RECEIPTS WITHOUT ANY EVIDENCE OR ENQUIRY CONDUCTED IN THIS R EGARD. 2. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN TREATING THE DEPOSITS IN THE BANKS AS BUSI NESS RECEIPTS WHEN HE HIMSELF HAD AGREED IN HIS ORDER THAT THE AS SESSEE HAS NOT FURNISHED ANY EVIDENCE IN SUPPORT OF BUSINESS B EING CONDUCTED BY THE ASSESSEE. 3. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN APPLYING THE N.P. RATE OF 8% ON UNEXPLAIN ED CREDITS WHEN THE LD. APPELLATE WAS NOT SURE HIMSELF REGARDI NG NATURE OF RECEIPTS.. 3. THE BRIEF FACTS RELATING TO THE ISSUE IN DISPUTE ARE THAT THE AO RECEIVED INFORMATION FROM THE DDIT (INV.) THAT THE ASSESSEE HAS MADE VARIOUS DEPOSITS IN THE BANK ACCOUNTS DURING THE FINANCIAL YEAR 2003-04 RELEVANT TO ASSESSMENT YEAR 2004-05 AND HE ISSUED NOTICE UNDER SECTION 148 OF THE ACT, AFTER RECORDING THE REASONS, WHICH THE AO HAS REPRO DUCED IN HIS ORDER. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE FILED HIS REPLY BY STATING THAT THE HE FILED THE RETURN OF INCOME FOR THE A.Y. 2004-05 VID E NO.5764 DATED 30.10.2004 AND THE SAME MAY BE TREATED AS FILED U/S 148 OF THE ACT. THEREAFTER, THE AO ISSUED NOTICE U/S 143(2)/142(1) OF THE ACT ALONGWITH THE QUESTIONNAIRE TO THE ASSESSEE. IN RESPONSE TO THE S AME, THE ASSESSEES COUNSEL, SH. RAJESH VERMA, ADV & POA HOLDER APPEARE D AND FILED HIS ITA NOS 466 TO 468 3 WRITTEN REPLY WHICH THE AO HAS REPRODUCED IN HIS AS SESSMENT ORDER. THE ASSESSEE MAINLY PLEADED THAT THE ASSESSEE HAS DEPOS ITED THE AMOUNT IN DISPUTE ON ACCOUNT OF ADVANCES RECEIVED FROM THE CU STOMERS WHO USE TO PAY ADVANCES AS BOOKING AMOUNT FOR THE PURCHASE OF MOBI LE PHONES. THE MONEY IS USED TO BE DEPOSITED IN THE BANKS AND WOULD GET WITHDRAWN FROM THE ATMS IN DELHI. THE ASSESSEE USED TO GET COMMISSION ON THESE SALES AND WAS LIABLE TO SPENT ALL TRAVELING AND BOARDING EXPENSES OUT OF THIS COMMISSION. THE ASSESSEE FURTHER STATED IN HIS REPLY THAT THE ASSESSEE DID NEVER HIMSELF GO TO THE DELHI AND FOR THAT HE HAD KEPT A PARTNER NAMELY MR. MOHAN LAL S/O SH. TARA CHAND R/O RAM NAGAR, DISTT. UDHAMPUR FOR WHICH PARTNERSHIP FIRM WAS DULY CONSTITUTED. THE ASSESSEE USED TO DEP OSIT THE ADVANCES RECEIVED IN THE BANK AND THE ATM CARDS WERE BEING H ELD BY MR. MOHAN LAL WHO USE TO WITHDRAW THIS MONEY FOR ARRANGING THE MO BILE PHONES TO BE DELIVERED TO RESPECTIVE CUSTOMERS. THE AO CALLED VA RIOUS INFORMATION AND DOCUMENTARY EVIDENCE FROM THE ASSESSEE IN SUPPORT O F ASSESSEES CONTENTION RAISED IN THE FIRST REPLY. BUT THE ASSESSEE HAD NO T FURNISHED ANY DOCUMENTARY EVIDENCE IN SUPPORT OF HIS CONTENTION. AFTER GOING THROUGH THE REPLY FILED BY THE ASSESSEE, THE AO LASTLY CAME TO THE CONCLUSION THAT THE ASSESSEE WAS NEITHER ABLE TO FURNISH SOURCE OF THESE DEPOSITS IN THE BANK NOR WAS ABLE TO FURNISH ANY DOCUMENTARY EVIDENCE IN SUPPORT OF HIS CONTENTION INSPITE OF ITA NOS 466 TO 468 4 VARIOUS OPPORTUNITIES GIVEN TO HIM. THE AO ALSO HE LD THAT SH. RAJESH VERMA, ADV. POA HOLDER ATTENDED HIS OFFICE ON 29.1 1.2010 AND EXPRESSED HIS INABILITY TO PROVIDE ANY MORE INFORMATION. KEEP ING IN VIEW THE AFORESAID DISCUSSION, THE AO WAS OF THE VIEW THAT THE ASSESSE E HAD NOT BEEN ABLE TO EXPLAIN THE SOURCE OF DEPOSITS IN HIS BANK ACCOUNT DURING THE FINANCIAL YEAR UNDER CONSIDERATION, NEITHER DURING THE COURSE OF A SSESSMENT PROCEEDINGS NOR DURING THE COURSE OF INVESTIGATIONS CARRIED OUT BY DDIT (INV.) JAMMU. THE AO FURTHER HELD THAT INSPITE OF OPPORTUNITIES GIVEN TO THE ASSESSEE TO PRODUCE MR. MOHAN LAL FOR VERIFICATION BUT THE ASSESSEE FAI LED TO DO SO. THUS, THE ASSESSEE HAS NOT BEEN ABLE TO DISCHARGE THE ONUS TO SATISFACTORILY EXPLAIN THE SOURCE OF DEPOSITS APPEARING IN HIS BANK ACCOUNTS A ND AO COMPLETED ASSESSMENT BY MAKING ADDITION IN DISPUTE ON ACCOUNT OF UNEXPLAINED INVESTMENT BY FRAMING ASSESSMENT UNDER SECTION 147 READ WITH SECTION 143(3) OF THE ACT. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. FIRST APPELLATE AUTHORITY, WHO VIDE IMPUGNED ORDER DATED 30.06.2011 PARTLY ALLOWED THE APPEALS FILED BY THE ASSESSEE BY APPLYI NG NET PROFIT RATE OF 8% ON TOTAL DEPOSITS ON NOTIONAL BASIS. 4. NOW AGGRIEVED WITH THE CONSOLIDATED ORDER OF THE LD. CIT(A), DATED 30.06.2011, THE REVENUE IS IN APPEAL BEFORE THIS BE NCH. ITA NOS 466 TO 468 5 5. NOTICE OF HEARING BY RPAD WAS ISSUED TO THE ASSE SSEE FOR 02.05.2012 WHICH HAS BEEN SERVED UPON THE ASSESSEE AND ACKNOWL EDGEMENT CARD IS ON RECORD AS TOKEN OF PROOF. NEITHER THE ASSESSEE NOR HIS AUTHORIZED REPRESENTATIVE APPEARED IN RESPONSE TO THE SAID NOT ICE. THE ASSESSEE HAS NOT EVEN FILED ANY ADJOURNMENT APPLICATION. KEEPING IN VIEW THE VALID SERVICE EFFECTED ON THE ASSESSEE, WE PROCEED TO DECIDE THE ISSUE IN DISPUTE EX-PARTE ASSESSEE. 6. THE LD. DR RELIED UPON THE ORDER PASSED BY THE A O AND THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL. 7. AFTER HEARING THE LD. DR AND PERUSING THE ORDERS PASSED BY THE AUTHORITIES BELOW, WE ARE OF THE VIEW THAT THE AO H AS REOPENED THE ASSESSMENT OF THE ASSESSEE BY RECORDING REASONS WHI CH HE HAS REPRODUCED AT PAGES 1-2 OF THE ASSESSMENT. HE HAS ALSO ISSUED NOT ICE U/S 148 OF THE ACT TO THE ASSESSEE AND IN RESPONSE TO THE SAME; THE ASSES SEE HAS ALSO FILED HIS REPLY BY STATING THAT HIS RETURN OF INCOME FOR THE ASSESS MENT YEAR IN DISPUTE MAY BE TREATED AS HIS REPLY TO THE NOTICE ISSUED U/S 14 8 OF THE ACT. THE AO ALSO ISSUED NOTICE U/S 143(2)/142(1) OF THE ACT ALONGWIT H DETAILED QUESTIONNAIRE TO THE ASSESSEE, WHICH HAS BEEN SERVED UPON THE ASS ESSEE BECAUSE IN RESPONSE TO THE SAME, THE AUTHORIZED REPRESENTATIVE OF THE A SSESSEE APPEARED AND FILED HIS REPLY, WHICH THE AO HAS REPRODUCED AT PAGES 2 & 3 OF THE ASSESSMENT ITA NOS 466 TO 468 6 ORDER. THE AO HAS GIVEN FULL OPPORTUNITY TO THE AS SESSEE FOR SUBSTANTIATING THE CLAIM WITH PROOF OF DOCUMENTARY EVIDENCE BUT THE ASSESSEE HAS NOT AVAILED OF THE SAME AND LASTLY THE AO HAS ALSO REQU ESTED TO THE ASSESSEE TO PRODUCE MR. MOHAN LAL S/O SH. TARA CHAND R/O RAM NA GAR, DISTT. UDHAMPUR, WHO IS PARTNER IN THE ASSESSEE-FIRM AND W ITHDRAWING MONEY BY USING ATMS AT DELHI AND PURCHASING MOBILE PHONES FO R CUSTOMERS AS EXPLAINED BY THE ASSESSEE IN HIS REPLY GIVEN BEFORE THE AO. AFTER AFFORDING REASONABLE OPPORTUNITY TO THE ASSESSEE FOR PRODUCTI ON OF NECESSARY EVIDENCE IN SUPPORT OF ASSESSEES CLAIM, NEITHER THE ASSES SEE NOR HIS AUTHORIZED REPRESENTATIVE FILED ANY EVIDENCE AND THE AO LASTL Y MADE THE ADDITION IN DISPUTE ON ACCOUNT OF UNEXPLAINED INVESTMENT BY COM PLETING ASSESSMENT FOR THE ASSESSMENT YEARS IN DISPUTE. BUT THE LD. FIRST APPELLATE AUTHORITY HAS DELETED THE ADDITION ON ACCOUNT OF UNEXPLAINED INVE STMENT BY APPLYING NET PROFIT RATE OF 8% ON TOTAL DEPOSITS ON AD-HOC BASIS . KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE ARE OF THE CONSIDERED OPINION THAT THE LD. FIRST APPELLATE AUTHORITY IS NOT RIGHT IN TREATING THE DEPOSITS IN THE BANKS AS BUSINESS RECEIPTS WITHOUT ANY EVIDENCE. AF TER GOING THROUGH THE ASSESSMENT ORDERS PASSED BY THE AO AS WELL AS IMPUG NED ORDERS PASSED BY THE LD. FIRST APPELLATE AUTHORITY, WE ARE OF THE VI EW THAT THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE SUPPORTING HIS CLAIM BUT THE LD. FIRST APPELLATE ITA NOS 466 TO 468 7 AUTHORITY HAS WRONGLY TREATED THE DEPOSITS IN THE B ANKS AS BUSINESS RECEIPTS INSPITE OF THE FACT THAT THE ASSESSEE HAS NOT FURNI SHED ANY EVIDENCE PROVING THE DEPOSITS IN DISPUTE ARE BUSINESS RECEIPTS. EVEN THE ASSESSEE HAS NOT PRODUCE HIS PARTNER, NAMELY, MR. MOHAN LAL S/O SH. TARA CHAND R/O RAM NAGAR, DISTT. UDHAMPUR, FOR VERIFICATION, WHO WAS W ITHDRAWING MONEY FROM THE ATMS IN DELHI AND PURCHASING MOBILES FOR CUSTOM ERS AS PER THEIR REQUIREMENTS. 7.1. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES AS EXPLAINED ABOVE, WE ARE OF THE VIEW THAT THE LD. FIRST APPELLATE AUTHOR ITY HAS PASSED THE IMPUGNED ORDERS CONTRARY TO LAW AND FACTS ON RECORDS, WHICH DESERVE TO BE CANCELLED. THUS, KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND NON-CO-OPERATION OF THE ASSESSEE IN THE ASSESSMENT PROCEEDINGS FOR NOT PRODUCING THE PARTNER OF THE ASSESSEE-FIRM MR. MOHA N LAL S/O SH. TARA CHAND R/O RAM NAGAR, DISTT. UDHAMPUR, AS WELL AS DO CUMENTARY EVIDENCE AS REQUIRED BY THE AO FOR SUBSTANTIATING HIS CLAIM. NO DOUBT, THE ASSESSEE IN THE GROUNDS RAISED BEFORE THE LD. FIRST APPELLATE A UTHORITY HAS ALSO CONTENDED THAT THE AO HAS NOT PROVIDED REASONABLE OPPORTUNITY TO THE ASSESSEE TO PROVE HIS CONTENTION OF HAVING CARRIED OUT THIS BUSINESS IN PARTNERSHIP. THE LD. FIRST APPELLATE AUTHORITY HAS NOT COMMENTED ON THE SAME. THEREFORE, WE ARE OF THE VIEW THAT IN THE INTEREST OF JUSTICE, THE IS SUE IN DISPUTE IS REQUIRED TO E ITA NOS 466 TO 468 8 RECONSIDERED AT THE LEVEL OF THE AO TO DECIDE THE S AME AFRESH UNDER THE LAW AFTER GIVING OPPORTUNITY TO THE ASSESSEE FOR SUBSTA NTIATING HIS CLAIM BEFORE THE A.O. HENCE, ALL THE APPEALS FILED BY THE REVENU E ARE ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, ALL THE APPEALS OF THE REVENUE A RE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 7TH MAY, 2012. SD/- SD/- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 7TH MAY, 2012 /SKR/ COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE: SH. GAURAV VERMANI, JAMMU. 2. THE ITO WARD 1(1), JAMMU. 3. THE CIT(A), JAMMU. 4. THE CIT,JAMMU. 5. THE SR DR, ITAT, AMRITSAR TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH : AMRITSAR.