Arun Prannath Raina, Pune V. Income-tax Officer, Ward - 7(3), Pune

ITA 515/PUN/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0274 (ITAT-PUNE)
• Duration Of Justice: 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 10-12-2018
• Assessment Year: 2013-2014
• Appeal Filed On: 22-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M K VERMA
• Section: 68; 44AD

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT . / ITA NO.515/PUN/2018 / ASSESSMENT YEAR : 2013-14 ARUN PRANNATH RAINA, 14, KONARK HAPPY HOMES, 09 VIMAN NAGAR, PUNE 411 014 PAN : AFXPR6699L VS. ITO, WARD-7(3), PUNE (APPELLANT) (RESPONDENT) / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A)-5, PUNE ON 21-12-2017 IN RELATION TO THE ASSESSMENT YEAR 2013-14. 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST THE CONFIRMATION OF ADDITION OF RS.30,00,525/- U/S. 68 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER ALSO CALLED AS THE ACT). IN THE ALTERNATE, THE ASSESSEE HAS PRAYED THAT THE ADDITION BE RESTRICTED TO 8% PROFIT AS PER SECTION 44AD OF THE INCOME-TA X ACT, 1961 (HEREINAFTER ALSO CALLED `THE ACT). APPELLANT BY SHRI SHARAD SHAH RESPONDENT BY SHRI M.K. VERMA DATE OF HEARING 10-12-2018 DATE OF PRONOUNCEMENT 11-12-2018 ITA NO.515/PUN/2018 ARUN P. RAINA 2 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE, THAT THE ASSES SEE IS AN INDIVIDUAL WHO FILED HIS RETURN DECLARING TOTAL INCOME OF RS.1,88,119/-. DURING THE COURSE OF ASSESSMENT PROCEE DINGS, IT WAS OBSERVED THAT THE ASSESSEE DEPOSITED CASH IN HIS BANK ACCOUNT ON SEVERAL DATES. ON BEING CALLED UPON TO FURNIS H THE SOURCE OF DEPOSITS, THE ASSESSEE SUBMITTED THAT HE WAS IN THE BUSINESS OF COCO-PANI UNDER THE BANNER OF M/S. ALEKHA HOSPITALITY VENTURE AND THESE WERE THE RECEIPTS FROM SUCH BUSINESS WHICH WERE DEPOSITED IN THE BANK ACCOUNT. HE FURNISHED COPIES OF CERTAIN E-MAILS SENT BY THE ASSESSEE TO VARIOUS SOFTWARE AND OTHER COMPANIES SHOWING THE CARRYING ON OF BUSINESS OF COCO-PANI AND ALSO SUBMITTED THE BROCHURE O F COCO-PANI VEHICLES ETC. THE AO REQUIRED THE ASSESSEE TO SUBSTANTIATE THE PURCHASES OF COCONUT FROM MARKET AND SU PPLY OF THE SAME TO VARIOUS OUTLETS. THE ASSESSEE SUBMITTED THA T HE HAD CLOSED DOWN HIS BUSINESS AND DID NOT HAVE ANY SALE/PURCHASE BILLS. THE AO OPINED THAT THE ASSESSEE DID NOT PROVE THE GENUINENESS OF PURCHASES/SALES OF COCO-PANI. HE, THEREFORE, HELD THAT THE ASSESSEE DID NOT SUCCESSFULLY EXPLAIN THE SOURCE OF DEPOSIT OF RS.30.00 LAKHS AND ODD IN HIS HD FC BANK ACCOUNT. INVOKING THE PROVISIONS OF SECTION 68 OF TH E ITA NO.515/PUN/2018 ARUN P. RAINA 3 ACT, HE MADE AN ADDITION OF RS.30,00,525/-, WHICH CAME TO BE APPROVED IN THE FIRST APPEAL. 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE RELEVANT MATERIAL ON RECORD, IT IS OBSERVED THAT THE AO INITIATED THE PROCESS BY EXAMINING THE AMOUNT OF CASH DEPOSITS BY THE ASSESSEE IN HIS HDFC ACCOUNT. THE ASSESSEE SUBMITTED THAT HE WAS CARRYING ON THE BUSINESS OF COCO-PANI AND RECEIPTS FROM SUCH BUSINESS WERE DEPOSITED IN THIS BANK ACCOUNT, FOR WHIC H NO DETAILED PARTICULARS WERE MAINTAINED/FURNISHED. THE AO REFUSED TO ACCEPT THE FACTUM OF THE ASSESSEE CARRYING ON THIS BUSINESS. I HAVE GONE THROUGH THE COPY OF BANK ACCOUN T OF THE ASSESSEE IN WHICH DEPOSITS WERE MADE. THERE ARE SEVERAL ENTRIES WITH VARYING AMOUNTS SPREAD OVER THROUGHOUT THE YEAR WHICH TOTALLED UP TO RS.30,00,525/-. THE AMOUNTS VARY FRO M AS LOW AS RS.1,980/- AND AS HIGH AS RS.58,000/-. ALON G WITH SUCH DEPOSITS, THERE ARE SEVERAL WITHDRAWALS AS WELL. THE ASSESSEE SUBMITTED AN EXPLANATION THAT HE WAS CARRYING ON TH E BUSINESS OF COCO-PANI, WHICH THE AUTHORITIES HAVE REFUSED TO ACCEPT. PAGE 22 OF THE PAPER BOOK IS A COPY OF LICENCE DATED 15-06-2012 GRANTED BY MUMBAI SHOPS AND ESTABLISHMENT ACT, 1948 TO THE ASSESSEE FOR CARRYING ON `COCONUT RETAIL TRADE . ITA NO.515/PUN/2018 ARUN P. RAINA 4 PAGE 52 OF THE PAPER BOOK IS A COPY OF REGISTRATION OF TRADEMARK BY THE ASSESSEE FOR CARRYING ON THE BUSINESS OF `COCO-PANI. SUCH REGISTRATION WAS GRANTED IN 2012. PAGE 23 OF THE PAPER BOOK IS A COPY OF `LETTER OF INTENT DATED 2 8-06- 2012 ISSUED BY QUADRON BUSINESS PARK LIMITED TO THE ASSES SEE FOR SETTING UP FOOD AND BEVERAGES KIOSK WITH THE BRAND COC O- PANI. PAGE 64 OF THE PAPER BOOK IS A COPY OF E-MAIL BETW EEN THE ASSESSEE AND SOME OFFICIALS OF INFOSYS TO WHOM THE ASSESSEE WAS SUPPLYING COCO-PANI. THERE IS A REFERENCE TO CERTAIN TRANSACTIONS OF COCO-PANI IN IT. IN SIMILAR WAY, THE RE ARE CERTAIN OTHER COPIES OF E-MAILS BETWEEN THE ASSESSEE AN D OTHER COMPANIES TO WHOSE STAFF THE ASSESSEE WAS REGULARLY SELLING COCO-PANI. DURING THE COURSE OF REMAND PROCEEDINGS , THE ASSESSEE PRODUCED ONE MR. RASHID AJIZ BAGWAN WHO SUPPLIED COCONUT TO THE ASSESSEE. THE AO DURING THE REMA ND PROCEEDINGS RECORDED THE STATEMENT OF MR. RASHID AJIZ BAGWAN AND ALSO MENTIONED THIS FACT IN HIS REPORT DATED 27-09-2017, WHOSE COPY IS AVAILABLE AT PAGE 8 4 OF THE PAPER BOOK. IN HIS REMAND REPORT, THE AO HAS ACKNOWLEDGED THAT MR. RASHID AJIZ BAGWAN ADMITTED TO HAVE SUPPLIED THE COCONUT TO THE ASSESSEE. THE VIEW POINT WAS NO T ITA NO.515/PUN/2018 ARUN P. RAINA 5 ACCEPTED BECAUSE NO SUPPORTING DOCUMENTARY EVIDENCE WAS PLACED ON RECORD. VARYING NATURE OF BANK DEPOSITS THROUG HOUT THE YEAR INDICATE THAT THE ASSESSEE WAS DEPOSITING CASH REC EIPTS IN THE BANK ACCOUNT AT REGULAR INTERVALS AND SIMULTANEOUSLY THERE ARE CERTAIN DEBITS ALSO AT THE SAME FREQUENCY FROM THE SAME BANK ACCOUNT. THUS, IT BECOMES PATENT BEYOND AN IO TA OF DOUBT THAT THE ASSESSEE WAS, IN FACT, CARRYING ON THE BUSIN ESS OF COCO-PANI DURING THE YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION AND THE DEPOSITS IN THE BANK ACCOUNT WER E GENERATED FROM THE SAID BUSINESS ONLY. 5. ADMITTEDLY, THE ASSESSEE DID NOT MAINTAIN REGULAR BOOKS OF ACCOUNT OF SUCH A BUSINESS. IN VIEW OF THE FACT THAT THE ASSESSEE DID NOT DISCLOSE INCOME FROM SUCH BUSINESS OF C OCO- PANI IN HIS RETURN, SUCH INCOME IS DEFINITELY REQUIRED TO BE COMPUTED. IN MY CONSIDERED OPINION AND TAKING INTO CONSIDERATION ALL THE RELEVANT FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE CONSIDERED OPINION THAT IT WOULD BE IN THE FITNESS OF THINGS IF 8% OF GROSS RECEIPTS OF RS.30,00,525 /- IS HELD TO BE AN AMOUNT OF INCOME INCLUDABLE IN THE TOTAL INCOME OF THE ASSESSEE. THE LD. AR DID NOT OBJECT TO THE INCLUSIO N OF THE INCOME @ 8% FROM SUCH BUSINESS WHICH IS ASSESSEES ITA NO.515/PUN/2018 ARUN P. RAINA 6 CONTENTION ALSO RAISED THROUGH GROUND NO. 4 OF THE APPEAL BEFORE THE TRIBUNAL. I, THEREFORE, DIRECT TO DELETE THE ADDITIO N OF RS.30,00,525/- MADE U/S. 68 OF THE ACT AND TO MAKE AN ADDITION @ 8% OF GROSS RECEIPTS AT RS.2,40,042/-. 6. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH DECEMBER, 2018. SD/- (R.S.SYAL) / VICE PRESIDENT PUNE; DATED : 11 TH DECEMBER , 2018 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT (APPEALS)-5, PUNE 4. / THE PR. CIT-4, PUNE 5. , , SMC / DR SMC, ITAT, PUNE; 6. / GUARD FILE. // TRUE COPY // / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECR ETARY , / ITAT, PUNE ITA NO.515/PUN/2018 ARUN P. RAINA 7 DATE 1. DRAFT DICTATED ON 10-12-18 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 11-12-18 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *