Shri Dilipbhai Vaghjibhai Patel, Surat V. The Income tax Officer,Ward-9(1), Surat

ITA 5/AHD/2011

• Counselvise Citation: 520514 RSA 2011
• Duration Of Justice: 3 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 18-12-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 03-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DK MISHR A
• Assessee Lawyers: RONAK PAREKH
• Keywords: Unexplained cash credit; Unexplained investment; Gift; Opportunity of being heard
• Section: 147; 148; 144; 44AD

Judgement Text

, , , , SMC, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, SMC BENCH . .. . . .. . , ! ! ! ! BEFORE SHRI G.C. GUPTA, VICE-PRESIDENT ITA NO.5/AHD/2011 [ASSTT.YEAR : 2003-2004] SHRI DILIPBHAI VAGHJIBHAI PATEL BLOCK NO.1, GALA NO.3 ASHWIN SOCIETY BHAT NI WADI VARACHCHA ROAD, SURAT. PAN : ADSPP 6006 C /VS. ITO, WARD-9(1) SURAT. ( (( (#$ #$ #$ #$ / APPELLANT) ( (( (%&#$ %&#$ %&#$ %&#$ / RESPONDENT) '() * + !/ ASSESSEE BY : SHRI RONAK PAREKH -. * + !/ REVENUE BY : SHRI D.K. MISHRA, SR.DR ./ * )01/ DATE OF HEARING : 18 TH DECEMBER, 2013 234 * )01/ DATE OF PRONOUNCEMENT : 03-02-2014 !5 / O R D E R THIS APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2003-04 IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-V, SURAT D ATED 12.03.2010. 2. THE GROUND NOS.1, 2 AND 3 OF THE ASSESSEE ARE AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AS WELL AS LAW ON THE SUBJECT, THE LD.CIT(A) HAS ERRED IN APPL YING PROVISIONS OF SEC. 147 & 148 OF THE ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AS WELL AS LAW ON THE SUBJECT, THE LD.CIT(A) HAS ERRED IN GIVING R EASONABLE ITA NO.5/AHD/2011 OPPORTUNITY OF BEING HEARD AND HENCE ADDITION OF IN COME AND THEREBY MADE ADDITION AND TAXING THE SAME AS INCOME OF THE ASSESSEE WHICH IS AGAINST THE LAW OF NATURAL JUSTIC E AND EQUITY. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AS WELL AS LAW ON THE SUBJECT, THE LD.CIT(A) HAS ERRED IN TREA TING BUSINESS OF THE ASSESSEE AND NOT APPLYING PROVISIONS OF SEC. 44 AD OF THE ACT. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE REOPENING WAS MADE WITHIN FOUR YEARS FROM THE END OF THE ASSE SSMENT YEAR AND THE ASSESSMENT WAS FRAMED UNDER SECTION 144 OF THE ACT. HE SUBMITTED THAT THE PROVISION OF SECTION 44AD OF THE ACT SHOULD HAV E BEEN APPLIED TO THE FACTS OF THE CASE OF THE ASSESSEE. THE LEARNED DR OPPOSED THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE . 4. I HAVE CONSIDERED RIVAL SUBMISSION. I FIND THAT THE REOPENING IN THIS CASE IS VALID AS THE REOPENING IS WITHIN FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR AND THE ASSESSMENT WAS FRA MED UNDER SECTION 144 OF THE ACT DUE TO NON-COOPERATION ON THE PART O F THE ASSESSEE. NO COGENT REASON FOR APPLICABILITY OF SECTION 44AD OF THE ACT COULD BE GIVEN BY THE ASSESSEE. ACCORDINGLY, THE GROUND NOS.1, 2 AND 3 OF THE ASSESSEES APPEAL ARE DISMISSED. 5. THE GROUND NO.4 OF THE ASSESSEES APPEAL IS AS U NDER: 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AS WELL AS LAW ON THE SUBJECT, THE LD.CIT(A) HAS ERRED IN TREA TING DISALLOWANCE OF EXPENSES OF RS.27,948/- AND THEREBY MADE ADDITION AND TAXING THE SAME AS INCOME OF THE ASSESSEE. 6. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE DISALLOWANCE OF 25% OF THE PURCHASE WAS MADE BY THE AO WHICH WAS RESTRICTED TO 10% OF THE TOTAL EXPENSE AT ` 27,948/- BY THE CIT(A). HE SUBMITTED THAT NO REASON FOR THE DISALLOWANCE WAS G IVEN BY THE ITA NO.5/AHD/2011 DEPARTMENT. THE LEARNED DR HAS RELIED ON THE ORDER S OF THE AO AND THE CIT(A). 7. I HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AO AND THE CIT(A). I FIND THAT IN THE FACTS AND CI RCUMSTANCES OF THE CASE, THE DISALLOWANCE RESTRICTED TO 10% OF THE TOTAL EXP ENSES AT ` 27,948/- WAS QUITE REASONABLE, WHICH IS CONFIRMED AND THE GROUND NO.4 OF THE ASSESSEE IS DISMISSED. 8. THE GROUND NO.5 OF THE ASSESSEES APPEAL IS AS U NDER: 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A S WELL AS LAW ON THE SUBJECT, THE LD.CIT(A) HAS ERRED IN TREA TING UNEXPLAINED CREDITS IN TO CAPITAL ACCOUNT FOR RS.17,345/- AND T HEREBY MADE ADDITION AND TAXING THE SAME AS INCOME OF THE ASSES SEE. 9. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE DISALLOWANCE UNDER THIS HEAD WAS RESTRICTED TO ` 17,345/- BY THE CIT(A). HE SUBMITTED THAT THERE IS NO VALID REASON FOR CONF IRMATION OF PART DISALLOWANCE MADE BY THE AO. THE LEARNED DR HAS RE LIED ON THE ORDERS OF THE AO AND THE CIT(A). I HAVE CONSIDERED RIVAL SUBMISSIONS. I FIND THAT MAJOR PORTION OF THE ADDITION ON ACCOUNT OF AG RICULTURAL INCOME FROM AGRICULTURAL LAND RECEIVED IN INHERITANCE AFTER THE DEATH OF FATHER OF THE ASSESSEE WAS DELETED BY THE CIT(A). THE BALANCE AD DITION MADE WAS DUE TO UNEXPLAINED CREDIT IN THE CAPITAL ACCOUNT ON ACC OUNT OF MISCELLANEOUS GIFTS AND MUTUAL FUND REFUND, WHICH COULD NOT BE PR OVED BY THE ASSESSEE. IN THESE FACTS, I FIND NO MERIT IN THE GROUND NO.5 OF THE ASSESSEE, WHICH IS ACCORDINGLY DISMISSED. 10. THE GROUND NO.6 OF THE ASSESSEES APPEAL IS AS UNDER: ITA NO.5/AHD/2011 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AS WELL AS LAW ON THE SUBJECT, THE ASSESSING OFFICER HAS ERRED IN MAKING ADDITION OF UNEXPLAINED INVESTMENT OF RS.1,67,200/- 11. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE WERE NINE ENTRIES OF LOANS & ADVANCES ON THE ASSETS SIDE OF T HE BALANCE SHEET OF THE ASSESSEE AND THE INTEREST ON SUCH LOANS & ADVANCES HAS BEEN SHOWN BY THE ASSESSEE IN ITS COMPUTATION OF TOTAL INCOME, AND TH EREFORE, NO CASE OF ADDITION OF THIS AMOUNT, AS UNEXPLAINED INVESTMENT, COULD BE MADE OUT BY THE REVENUE. THE LEARNED DR HAS REFERRED TO THE RE LEVANT PORTIONS OF THE ASSESSMENT ORDER AND THE CIT(A)S ORDER IN SUPPORT OF THE CASE OF THE REVENUE. 12. I HAVE CONSIDERED RIVAL SUBMISSION AND PERUSED THE ORDERS OF THE AO AND THE CIT(A). I FIND THAT THERE WERE NINE EN TRIES OF LOANS & ADVANCES IN THE ASSETS SIDE OF THE BALANCE SHEET FI LED OF THE ASSESSEE. NONE OF THESE ENTRIES WAS FOUND TO BE OUTSIDE THE B OOKS OF ACCOUNTS OF THE ASSESSEE. THE CIT(A) HAS RECORDED A FINDING TH AT UNDISPUTEDLY THESE ASSETS ARE SHOWN IN THE BALANCE SHEET OF THE ASSESS EE. IT IS NOT EXPLAINED BY THE REVENUE THAT WHAT FURTHER PROOF OR EVIDENCE REGARDING SOURCE OF INVESTMENT WAS REQUIRED TO BE SUBMITTED BY THE ASSE SSEE, WHEN THE ASSET WAS ALREADY SHOWN IN ITS BALANCE SHEET FILED IN THE STATEMENT OF ACCOUNT DULY AUDITED BY THE CHARTERED ACCOUNTANT. IN THESE FACTS OF THE CASE, I HOLD THAT THERE IS NO VALID REASON TO MAKE THE AFOR ESAID ADDITION BY HOLDING THE UNEXPLAINED INVESTMENT IN THE HANDS OF THE ASSESSEE, WHICH IS ACCORDING DELETED AND THE GROUND NO.6 OF THE ASSESS EE IS ALLOWED. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- ( . .. . . .. . /G.C. GUPTA) /VICE-PRESIDENT