The Income Tax Officer, Srinagar V. Sh. Manzoor Ahmad Tanga, Srinagar

ITA 500/ASR/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7733 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 08-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S KANWAL LD
• Assessee Lawyers: UPENDER BHAT LD
• Section: 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. T.S. KAPOOR, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER I.T.A NO.500(ASR)/2015 ASSESSMENT YEAR:200 9-10 INCOME TAX OFFICER, WARD-3(2), SRINAGAR. VS. SH. MANZOOR AHMAD TANGA, AZAD BASTI, NATIPORA, SRINAGAR. PAN: (APPELLANT) (RESPONDENT) APPELLANT BY: SH. S.S.KANWAL (LD. DR) RESPONDENT BY: SH. UPENDER BHAT (LD. CA) DATE OF HEARING: 16.10.2017 DATE OF PRONOUNCEMENT:31.10.2017 ORDER PER N.K.CHOUDHRY: THE INSTANT APPEAL HAS BEEN PREFERRED BY THE REVENUE DEPARTMENT, ON FEELING AGGRIEVED AGAINST THE ORDER D ATED 10.06.2015 PASSED IN APPEAL NO.174/13-14 BY THE LD. CIT(A), JAMM U, FOR ASST. YEAR: 2009-10. 2. THE REVENUE DEPARTMENT HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 1. WHETHER THE LD. COMMISSIONER OF INCOME TAX(A), JAMMU WAS JUSTIFIED IN DELETING THE ADDITION OF RS.39,60,000/- WHEN DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAD FAILED TO E XPLAIN THE SOURCE OF INVESTMENT MADE IN THE PURCHASE OF LAND AND ALSO TH E DEPOSITS MADE IN THE BANK ACCOUNT MAINTAINED BY THE ASSESSEE. 1(A). WHETHER THE LD. COMMISSIONER OF INCOME TAX( A), JAMMU WAS JUSTIFIED IN DELETING THE ADDITION MADE WITHOUT VERIFYING THE SOURCE OF INVESTMENT MADE BY THE ASSESSEE IN THE BANK ACCOUNT PARTICULARLY WH EN THE ASSESSMENT WAS MADE EX-PRATE ON BEST JUDGMENT BASIS U/S 144 OF TH E I.T. ACT, 1961. ITA NO.500 (ASR)/2015 ASST. YEAR: 2009-10 2 2. WHETHER THE LD. COMMISSIONER OF INCOME TAX(A) ,JAMMU WAS JUSTIFIED IN HOLDING THAT THE GROSS TURNOVER OF THE ASSESSEE WAS ONLY AT RS.35,86,574/- AS AGAINST THE TURNOVER OF RS.52,89,894/- WORKED OUT B Y THE ASSESSING OFFICER. 3. WHETHER THE LD. COMMISSIONER OF INCOME TAX (A) , JAMMU WAS JUSTIFIED IN ISSUING DIRECTIONS FOR APPLYING OF NET PROFIT RATE OF 6% INSTEAD OF 10% APPLIED BY THE ASSESSING OFFICER ON THE REDUCED TURNOVER. 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THAT A NOTICE U/S 148 OF THE I.T. ACT WAS ISSUED TO THE A SSESSEE AND SUBSEQUENTLY, STATUTORY NOTICES HAVE BEEN ISSUED, THE REAFTER, ALTHOUGH IN SOME OF THE DATES, THE ASSESSEE REPRESENTED I TS CASE THROUGH AUTHORIZED REPRESENTATIVE, HOWEVER, DESPITE A VAILING NUMBER OF OPPORTUNITIES REMAINED UN-COMPLIED WITH THE REQUIS ITIONS/DEMANDED DOCUMENTS BY THE ASSESSEE AND, THEREFORE, THE ASSESSING OFFICE R WAS CONSTRAINED TO COMPLETE THE ASSESSMENT EX-PARTE U/S 144/1 47 OF THE I.T. ACT AFTER CONSIDERING THE MATERIAL/INFORMATION A VAILABLE ON RECORD, CONSTITUTING THE REASONS RECORDED FOR ISSUANCE OF NOTICE U/S 148 AND TREATED OF RS.34,60,000/- AS INCOME OF THE ASSESSEE FROM U NDISCLOSED SOURCE FOR THE ASSESSMENT YEAR UNDER REFERENCE AND FURTHER , ON THE TOTAL RECEIPTS OF RS.52,89,894/-, THE ASSESSING OFFICER APP LIED NET PROFIT RATE @ 10% AND THE ESTIMATION OF INCOME OF THE ASSESSEE WAS WORKED OUT AT RS.52,89,89/-. 4. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEFORE THE LD. CIT(A) WHO WHILE CONSIDERING THE CASE, DELETED THE ADDI TION OF RS.34,60,000/- AND TREATED THE GROSS TURN OVER AT RS.3 5,86,574/- INSTEAD OF RS.52,89,894/- WHICH WAS WORKED OUT BY THE ASSESSING OFFICER AND FURTHER REDUCED THE NET PROFIT RATE TO 6% INSTEAD OF 10% AS APPLIED BY THE ASSESSING OFFICER. 5. THE REVENUE DEPARTMENT PREFERRED THE INSTANT APPEAL AND IN SUPPORT OF ITS CASE SUBMITTED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN ITA NO.500 (ASR)/2015 ASST. YEAR: 2009-10 3 DELETING THE ADDITION OF RS.34,60,000/- BECAUSE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD FAILED TO EXPLAIN T HE SOURCE OF INVESTMENT MADE IN THE PURCHASE OF LAND AND ALSO THE DEPOSIT MADE IN THE BANK ACCOUNT MAINTAINED BY THE ASSESSEE. FURTHER THE IMPUGNED ADDITION WAS DELETED WITHOUT VE RIFYING THE SOURCE OF INVESTMENT MADE BY THE ASSESSEE IN THE BANK ACCOUN T PARTICULARLY WHEN THE ASSESSMENT WAS MADE EX-PARTE ON BEST JUDGMENT BASIS U/S 144 OF THE I.T. ACT, 1961. FURTHER THE LD. CIT(A) WRONGLY DETERMINED THE GROSS T URN OVER BY ASSESSING AT RS.35,86,574/- AS AGAINST THE TURN OVER RS.52,89,894/- WHICH WAS WORKED OUT BY THE ASSESSING OFFICE R. THE LD. CIT(A) WAS ALSO NOT JUSTIFIED WHILE REFUSING T HE NET PROFIT RATE FROM 10% TO 6%. 6. PER CONTRA, THE LD. AR RELIED UPON THE ORDER PASSED B Y THE LD. CIT(A) AND SUBMITTED THAT THE ORDER DOES NOT SUFFER FR OM ANY ILLEGALITY, PERVERSITY AND IMPROPRIETY. 7. WE HAVE GONE THROUGH WITH THE FACTS AND CIRCUMSTAN CES OF THE CASE AND RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE ORDER PASSED BY THE AUTHORITIES BELOW. AS IN THE INSTANT CASE, THE ASSESSMENT ORDER WAS PASSED U/S 144 OF THE I.T. ACT AND IT WAS OBSERVED BY THE ASSESSING OFFICER, THAT ASSESSEE HAS FAILED TO FILE ANY INCOME TAX RETURN AND ALSO FAILED TO PRODUCE COMPLETE DETAILS ALO NG WITH DOCUMENTARY EVIDENCE QUA INVESTMENT MADE BY THE ASSESSEE IN PURCHASE OF LAND ON CONSIDERATION OF RS.34,60,000/- AT TRAL, PULWAMA, (J&K). THE LD. CIT(A) CALLED FOR THE REMAND REPORT A ND WHILE ITA NO.500 (ASR)/2015 ASST. YEAR: 2009-10 4 CONSIDERING THE REMAND REPORT, IT WAS REVELED THAT THE ASSESSEE HAS BEEN FILING INCOME TAX RETURNS SINCE 2006-07 TO THE REL EVANT YEAR I.E., 2009-10 AND CAME TO THE CONCLUSION THAT THE ADDITION OF RS.34,60,000/- ON ACCOUNT OF PURCHASE OF LAND WAS BY TRA NSFER OF AMOUNT FROM THE APPELLANTS ACCOUNT, IT EMERGED FROM T HE SUBMISSION, REMAND REPORT AND ITS REJOINDER THAT THE APPELLANT E XPLAINED THE DEPOSITS BY WAY OF LOAN/CONTRIBUTION FROM THE MEMBERS O F THE FAMILY, AND AO IN HER REMAND REPORT MENTIONED ABOUT THE ACKN OWLEDGEMENT OF AFFIDAVITS AND FINANCIAL STATEMENTS OF THE PROSPECTIV E PURCHASERS AND DID NOT COMMENT ADVERSELY ON THE DOCUMENTS AND AFF IDAVITS SUBMITTED BY THE APPELLANT REGARDING THE SOURCE OF INV ESTMENT AND EVEN THE APPELLANTS OWN SOURCES WERE REFLECTED IN THE B ALANCE SHEET AS CAPITAL AND OTHER CASH/BANK ACCRUALS WHICH THE AO HAS NO T COMMENTED ADVERSELY. FURTHER, THE LD. CIT(A) ALSO OBSERVED THAT THOUGH TH E AMOUNT OF INVESTMENT IS ROUTED THROUGH THE BANK ACCOUNT OF THE AP PELLANT BUT THE PROPERTY IN QUESTION WAS PURCHASED BY THE CONTRIBUTO RS JOINTLY IN THE INDIVIDUAL NAME AS PER THE FAMILY SETTLEMENT DEED AND THE ACCOUNT OF THE APPELLANT WAS USED ONLY A FACILITATOR BECA USE THE INDIVIDUAL CONTRIBUTORS HAVE CONFIRMED THEIR CONTRIBUTI ON THROUGH AFFIDAVITS, WHICH THE AO HAS NOT DISCREDITED. THEREFOR E, THE EVIDENCES FURNISHED BY THE APPELLANT CANNOT BE REJECTED WITHOUT FINDING FAULT WITH THEM AND FINALLY THE LD. CIT(A) JUSTIFIED IN DELETI NG THE ADDITION OF RS.34,60,000/-. FROM THE OBSERVATIONS AND CONCLUSION OF THE ASSESSEE, WE DO NOT FIND ANY CONTRARY REASONS OR MATERIAL TO INTERFERE WIT H. HENCE, THE GROUND NO.1 & 2 AS THE SAME ARE LINKED WITH EACH OT HER, STANDS REJECTED. ITA NO.500 (ASR)/2015 ASST. YEAR: 2009-10 5 NOW COMING TO GROUND NO.3, THE LD. CIT(A) WHILE DET ERMINING THE GROSS TURN OVER AT RS.35,86,574/- APPLIED HIS MIND AND FIND OUT THAT THERE IS AN ADVANCE OF RS.22,22,000/- SHOWN FROM R ELATIVES FOR PURCHASER OF LAND, THEREFORE, THE SAME CANNOT BE TREATE D AS PART OF THIS SALE/TURN OVER AND THE APPELLANT HAS HIMSELF ADMIT TED GROSS SALES OF RS.5,18,680/- WHICH WAS ALTHOUGH NOT DEPOSITED IN TH E BANK BUT FORM PART OF THE TURN OVER, THEREFORE, THE TURN OVE R OF THE APPELLANT WAS TAKEN AT RS.35,86,574/- (RS.52,89,894/--RS.22,22,00 0/- + 5,18,680/-) AFTER DEDUCTING THE AFORESAID FIGURES FRO M TOTAL DEPOSITS/CREDITORS. WE DO NOT FIND ANY FAULT IN THE CAL CULATION OF THE LD. CIT(A), HENCE, GROUND NO.3 STANDS DISMISSED. GROUND NO.4 RELATES TO THE NP RATE. THE LD. CIT(A) OBSERVED THAT NP RATE @ 10% WAS ARBITRARILY APPLIED BY THE AO WITHOUT QUOTING ANY COMPARABLE CASES, IF THE AO HAS ACKNOWLEDGED IN REMAN D REPORT THAT THE RETURNS IN THE PAST WERE FILED BY THE APPELL ANT. EVEN IF THE APPELLANT COULD NOT ATTEND THE PROCEEDINGS AND THE ASSESSM ENT WAS TO BE COMPLETED EXPARTE BUT STILL THE PAST RESULTS WITHOUT PROPER REASONS COULD NOT BE REJECTED, THEREFORE, THE LD. CIT(A) WHI LE CONSIDERING N.P RATE THE PREVIOUS ASSESSMENT YEARS, APPLIED THE N.P. RATE @ 6% AS REASONABLE. WE ARE IN CONCURRENCE WITH THE OBSERVATIONS OF THE LD. CIT(A) BECAUSE HE HAS RIGHTLY COMPARED THE NET PROFIT RATES OF PREVIOUS YEARS, APPLIED N.P. RATE @ 6% WHICH IS QUITE REASONABL E, HENCE, THE ORDER UNDER CHALLENGE DOES NOT SUFFER ANY PERVERSITY, I LLEGALITY, IMPROPRIETY, THEREFORE GROUND NO.4 ALSO DISMISSED. ITA NO.500 (ASR)/2015 ASST. YEAR: 2009-10 6 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE/DEPA RTMENT STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.10.2017. SD/- SD/- (T. S. KAPOOR) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:31.10.2017. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER