Anita Aggarwal, V. ACIT,

ITA 482/DEL/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0869 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 06-10-2009
• Assessment Year: 2003-2004
• Appeal Filed On: 08-02-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRATIMA KAUSHIK
• Assessee Lawyers: TILAK RAJ
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A : NEW DELHI BEFORE SHRI I.P.BANSAL, JM AND SHRI R.C.SHARMA, AM ITA NO.482/DEL/2008 ASSESSMENT YEAR : 2003-04 MS.ANITA AGGARWAL, 38, CIVIL LINES, ROORKEE. PAN NO.AFJPA9206F. VS. ASSTT.COMMISSIONER OF INCOME TAX, HARIDWAR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TILAK RAJ, ADVOCATE. RESPONDENT BY : MS.PRATIMA KAUSHIK, SR.DR. ORDER PER R.C.SHARMA, AM : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF CIT(A) DATED 18.12.2007 FOR THE AY 2003-04. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. FACTS IN BRIEF ARE THAT ASSESSEE IS A SMALL TRADER ENGAGED IN RETAIL T RADING OF MARBLE, CEMENT, BRICKS AND OTHER MATERIALS. THE ASSESSEE FILED ITS RETURN OF INCOME AT RS.1,43,270/-. THE CASE WAS SELECTED FOR SCRUTINY. THE RETURN WAS FIL ED ALONGWITH THE STATEMENT OF AFFAIRS AND COMPUTATION OF BUSINESS INCOME, WHEREIN PROFIT WAS COMPUTED U/S 44AF ON THE SALES OF RS.22,94,250/-. THE AO OBTAIN ED CERTAIN INFORMATION FROM THE BANK ACCORDING TO WHICH ASSESSEE HAS FILED INFL ATED BALANCE SHEET, TRADING AND PROFIT & LOSS ACCOUNT WITH THE BANK. AFTER COMPARI NG THE BALANCE SHEET FILED WITH THE BANK, AO MADE ADDITION ON ACCOUNT OF DIFFERENCE IN THE CLOSING STOCK AS SHOWN IN THE STATEMENT OF AFFAIRS FILED WITH THE DE PARTMENT VIS--VIS BALANCE SHEET FILED WITH THE BANK. AO ALSO MADE ADDITION BY APPL YING 5% PROFIT RATE U/S 44AF ON THE SALES DISCLOSED IN THE TRADING ACCOUNT FILED WITH THE BANK. CONTENTION OF THE ASSESSEE WAS THAT BALANCE SHEET FILED WITH THE BANK WAS FOR THE PURPOSE OF AVAILING CREDIT FACILITIES AS THE ASSESSEE WAS IN ACUTE NEED OF FUNDS AND HAS NO RELEVANCE ITA-482/D/2008 2 WITH THE ACTUAL STATE OF AFFAIRS. THE AO DID NOT A CCEPT ASSESSEES CONTENTION AND MADE THE ADDITION OF RS.7.64 LAKHS ON ACCOUNT OF DI FFERENCE IN THE FIGURE OF STOCK AND RS.0.72 LAKHS ON ACCOUNT OF PROFIT ON HIGHER SA LES. IN AN APPEAL FILED BEFORE THE CIT(A), THE ADDITION MADE AT RS.8.37 LAKHS WAS CONFIRMED BY HIM TO THE EXTENT OF RS.3.44 LAKHS WHICH WAS ATTRIBUTABLE TO DIFFEREN CE IN THE CAPITAL ACCOUNT DISCLOSED AS PER ASSESSEES ACCOUNTS AND THE INFLAT ED BALANCE SHEET FILED WITH THE BANK FOR LOAN. FURTHER AGGRIEVED, ASSESSEE IS IN A PPEAL BEFORE US. 3. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FOU ND FROM THE RECORD THAT ASSESSEE IS A SMALL TRADE AND FILED HIS RETURN U/S 44AF, WHEREIN INCOME WAS ESTIMATED AT 5% OF SALES. THE ASSESSEE WAS NOT MAI NTAINING ANY BOOKS OF ACCOUNT AND WAS ALSO NOT SUPPOSED TO MAINTAIN THE SAME IN V IEW OF THE PROVISIONS OF SECTION 44AB. HOWEVER, BEING IN FINANCIAL CRISES, ASSESSEE TRIED TO AVAIL OVERDRAFT FACILITY FROM THE BANK AND THEREFORE FILED A BALANC E SHEET AND TRADING AND PROFIT & LOSS ACCOUNT WITH THE BANK WHEREIN INFLATED FIGURE OF STOCK, SALES AND CAPITAL WAS SHOWN. TO SUBSTANTIATE THE ACTUAL SALES THE ASSESS EE HAS ALSO FILED SALES TAX ASSESSMENT ORDER BEFORE THE AO. THE AO DID NOT ACC EPT THE SAME AND ADDED THE DIFFERENCE IN STOCK AND ESTIMATED NP ON THE SALES S HOWN IN THE TRADING ACCOUNT FILED WITH THE BANK. THE CIT(A) RESTRICTED THE ADD ITION TO THE EXTENT OF DIFFERENCE IN THE CAPITAL SHOWN AS INVESTED IN THE BUSINESS. THERE IS NO DISPUTE TO THE FACT THAT BECAUSE OF SALES BELOW RS.40 LAKHS, THE ASSESSEE WA S NOT REQUIRED TO MAINTAIN BOOKS OF ACCOUNT AND THE SAME WERE ACTUALLY NOT MAI NTAINED. THE AO HAS NOT BROUGHT ON RECORD ANY CORROBORATIVE MATERIAL TO IND ICATE THAT FIGURES OF SALES, CLOSING STOCK AND CAPITAL AS SHOWN IN THE BALANCE S HEET FILED IN THE BANK WERE THE CORRECT FIGURES AND THE FIGURES WITH DEPARTMENT WER E WRONG FIGURES. ON THE OTHER HAND, THE ASSESSEE HAS SUBSTANTIATED THE FIGURE OF SALES ON WHICH PROFIT IS REQUIRED TO BE ESTIMATED U/S 44AF, WITH THE SALES TAX ASSESS MENT ORDER FRAMED BY THE GOVERNMENT AUTHORITY. SINCE THE BALANCE SHEET FILE D WITH THE BANK WAS ONLY FOR AVAILING THE CREDIT FACILITY AND NONE OF THE LOWER AUTHORITIES COULD BRING ANY CORROBORATIVE EVIDENCE ON RECORD TO SUBSTANTIATE TH E FIGURE SHOWN IN THE BALANCE ITA-482/D/2008 3 SHEET FILLED WITH THE BANK, SO AS TO MAKE THE SAME AS BASIS FOR ADDITION. THUS, THERE IS NO JUSTIFICATION FOR MAKING ADDITION MEREL Y ON ACCOUNT OF DIFFERENCE IN CLOSING STOCK SHOWN IN TWO DIFFERENT BALANCE SHEETS . THERE IS ALSO NO JUSTIFICATION FOR RETAINING ANY ADDITION ON ACCOUNT OF HYPOTHETIC AL FIGURES SHOWN IN THE CAPITAL ACCOUNT FILED WITH THE BANK. AS THE ASSESSEE WAS A SSESSED U/S 44AF, ONLY BASIS FOR ESTIMATING PROFIT IS FIGURE OF SALES. AS THE AO HA S ACCEPTED THE FIGURE OF SALES AT RS.37.48 LAKHS, APPLYING 5% PROFIT RATE THEREON RES ULTS INTO ADDITION OF RS.72,400/- AS MADE BY THE AO VIDE PARA 5, PAGE 4 OF HIS ORDER. KEEPING IN VIEW TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE MODIFY BOTH THE ORDERS OF THE LOWER AUTHORITIES AND RESTRICT THE ADDITION TO THE EXTENT OF RS.72,400/- ON ACCOUNT OF 5% NP ON THE SALES OF RS.37.48 LAKHS. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED IN PART. DECISION PRONOUNCED IN THE OPEN COURT ON 9 TH OCTOBER, 2009. SD/- SD/- (I.P.BANSAL) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 09.10.2009. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR