Ashish Jain, Delhi V. ITO, New Delhi

ITA 4931/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97406 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 09-09-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 22-08-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K K JAISWAL
• Assessee Lawyers: GAURAV MITTAL
• Keywords: Rejection of books of accounts; Gift; Business income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A : NEW DELHI BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND S MT. BEENA A. PILLAI, JUDICIAL MEMBER ITA NO . 4931 /DEL/201 3 ASSESSMENT YEAR: 2007 - 08 ASHISH JAIN, S/O - SH. ANIL VORA, VS. COMMISSIONER OF INCOME A - 290, 3 RD FLOOR, SHASTRI NAGAR, TAX (APPEALS) - VIII, NEW DELHI DELHI (PAN: AGOPJ9696H ) (APPELLANT) (RESPONDENT) APPELLANT BY : SH. GAURAV MITTAL, CA RESPONDENT BY : SH. K.K. JAISWAL, DR DATE OF HEARING: 09.09.2015 DATE OF PRONOUNCEMENT: 23.09.2015 ORDER PER INTURI RAMA RAO, A.M. : THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE CIT(A) - VIII, NEW DELHI DATED 28.12.2011 FOR THE ASSESSMENT YEAR 2007 - 08. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL: I. THAT THE LD. COMMISSIONER (APPEALS) WAS NOT JUSTIFIED IN UPHOLDING ADDITION OF RS.7,72,664/ - AND RS. 2,96,175/ - ON ACCOUNT OF ALLE GED OUT OF BOOKS PURCHASES AND G.P MARGIN ON SALES. THE ADDITIONS ARE UNJUSTIFIED, UNCALLED FOR AND IN ANY CASE EXORBITANT. II. THE ORDER OF THE LD. COMMISSIONER (APPEALS) SUFFERS FROM SERIOUS INFIRMITIES IN SUSTAINING THE ADDITIONS OF RS.10,68,839/ - AS THE I NCOME OF THE APPELLANT WHICH HAS BEEN CALCULATED AS UNDER: - PURCHASES (A) RS. 14,45,120/ - (1488212 - 43092) (1488212 - CHEQUE DISHONORED) PURCHASES DISCLOSED IN BOOKS OF ACCOUNTS (B) RS. 6,72,456/ - OUT OF BOOKS PURCHASES (A - B) RS. 7,72,664/ - 2 ADD: G.P. MARGIN ON SALES (27.71 %) (G.P. AS DECLARED BY THE ASSESSEE) RS. 2,96,175/ - TOTAL SALES RS. 10,68,839/ - III. THE LD. COMMISSIONER (APPEALS) HAS ERRED IN LAW AS WELL AS ON FACTS BY SUSTAINING TOTAL SPECULATED SALES O F RS. 10,68,839/ - AS NET INCOME(PROFIT) OF THE APPELLANT. HE FURTHER, FAILED TO APPRECIATE THAT THE ENTIRE SUM RECEIVED CANNOT, BY ANY STRETCH OF IMAGINATION BE TREATED AS INCOME OF THE APPELLANT. IV. THE LD. COMMISSIONER (APPEALS) FURTHER ACTED ARBITRARILY I N CONFIRMING AN ADDITION OF RS.50,000/ - ON ACCOUNT OF GIFT RECEIVED BY THE APPELLANT FROM HIS MOTHER, NOTWITHSTANDING THE FACTS THAT THE APPELLANT HAD ADDUCED SUFFICIENT EVIDENCE REGARDING THE GIFT. V. THE OBSERVATIONS OF THE LD. COMMISSIONER. (APPEALS) THAT FINDINGS OF THE. ASSESSING OFFICER WERE NOT REBUTTED NOR' ANY EVIDENCE IN SUPPORT OF CREDITWORTHINESS OF THE DONOR AND THE GENUINE NE SS OF THE TRANSACTION OF THE GIFT WAS FURNISHED IN THE COURSE OF THE APPELLATE PROCEEDINGS ARE UNTRUE AND INCORRECT. VI. THE AP PELLANT WAS NEVER ACCORDED A FAIR AND PROPER OPPORTUNITY BY THE LD. COMMISSIONER (APPEALS) TO REBUT THE PRESUMPTION OF THE ASSESSING OFFICER OR TO PRODUCE EVIDENCE TO SUBSTANTIATE GENUINENESS OF GIFT OR CREDITWORTHINESS OF THE DONOR DURING THE COURSE OF AP PELLATE PROCEEDINGS. VII. THE LD. COMMISSIONER (APPEALS) WAS NOT JUSTIFIED IN UPHOLDING THE REJECTION OF BOOKS OF ACCOUNTS BY THE ASSESSING OFFICER WHICH IS TOTALLY UNJUST, UNCALLED FOR AND UNWARRANTED. VIII. THE ORDER OF THE LD. COMMISSIONER (APPEALS) IS BAD IN LA W, ON FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE. IX. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OF THE FORGOING GROUNDS OF APPEAL AT THE TIME OF HEARING. 2. THE APPELLANT IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF TRADING IN CONFECTIONARY AND ALLIED PRODUCTS. THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007 - 08 WAS FILED ON 12 TH NOVEMBER, 2007, DECLARING TOTAL INCOME OF RS. 1,04,559/ - . AGAINST THE SAID RETURN OF INCOME, THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE INCOME - TAX ACT , 1961 (FOR SHORT THE ACT ) VIDE ORDER DATED 22 ND DECEMBER, 2009, AT A TOTAL INCOME OF RS. 12,23,398/ - . WHILE DOING SO, THE ASSESSING OFFICER MADE ADDITION OF RS. 10,68,839/ - AS UNACCOUNTED 3 SALES AND MADE ADDITION ON ACCOUNT OF GIFT RECEIVED FROM THE MOTH ER AT RS. 50,000/ - . THE ASSESSING OFFICER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, OBTAINED INFORMATION FROM M/S R.P. TRADERS FROM WHOM THE ASSESSEE HAD MADE PURCHASE. ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE MADE A TOTAL PURCHASE OF RS. 14,45 ,120/ - FROM M/S R.P. TRADERS. OUT OF THESE, AN AMOUNT TO THE EXTENT OF R S. 6,72,456/ - WERE SHOWN AS PURCHASES IN THE BOOKS OF ACCOUNT MAINTAINED. THEREFORE, HE DRAWN INFERENCE THAT THE ASSESSEE MADE PURCHASES OF RS. 7,72,664/ - OUT OF THE BOOKS AND HE AUDIT ED GROSS PROFIT MARGIN ON SALES @ 27.71% WHICH HAD COME TO RS. 10,68,839/ - , WHICH WAS TREATED AS A SALES MADE OUT OF THE BOOKS AND BROUGHT THE SAME TO TAX. HE FURTHER MADE ADDITION OF RS. 50,000/ - FOR THE GIFT RECEIVED FROM MOTHER ON THE GROUND THAT THE GIFT DEED FILED IS NOT REGISTERED AND THE GIFT WAS RECEIVED IN CASH. BEING AGGRIEVED, AN APPEAL WAS FILED BEFORE THE CIT(A), WHO VIDE ORDER DATED 28.12.2011 DISMISSED THE SAME. HENCE, THE ASSESSEE I S BEFORE US WITH THE PRESENT APPEAL. 3. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND FROM THE ASSESSMENT ORDER THAT THE ASSESSING OFFICER BROUGHT TO TAX THE ENTIRE AMOUNT OF THE SALES AS UNDISCLOSED INCOME. THIS, IN OUR CONSI DERED OPINION, DOES NOT STAND THE TEST OF THE LAW. THE ASSESSING OFFICER CAN ONLY BRING TO TAX THE PROFIT ELEMENT OF SALES. THEREFORE, EVEN ASSUMING THAT THERE WERE UNACCOUNTED SALES OF RS. 10,68,839/ - , PROFIT @ 8% NORMALLY ADOPTED IN THE CASE OF RETAIL TR ADE, CAN ONLY BE BROUGHT TO TAX. HENCE, WE DIRECT THE ASSESSING 4 OFFICER TO MAKE ADDITION ONLY @ 8% OF RS. 10,68,839/ - . ACCORDINGLY, THIS GROUND OF APPEAL IS DISPOSED OF. 4. AS REGARDS THE AMOUNT RELATING TO THE ADDITION OF RS. 50,000/ - , IN OUR CONSIDERED OPINION, THE ADDITION CANNOT BE SUSTAINED EVEN ASSUMING THAT THE GIFT IS BOGUS. THIS ITEM CANNOT BE TELESCOPED AGAINST THE ADDITION MADE ON ACCOUNT OF UNACCOUNTED SALES. THEREFORE, THIS GROUND OF APPEAL IS ALLOWED. 5. IN THE RESULT, THE APPEAL FILED BY T HE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. THE DECISION IS PRONOUNCED IN THE OPEN COURT ON 2 3 R D SEPTEMBER , 2015. S D / - S D / - ( BEENA A. PILLAI ) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 3 R D SEPTEMBER , 2015. RK/ - COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI