Vinod Kumar Chaddha, Jalaun V. Income Tax Officer-6(1), Jalaun

ITA 520/LKW/2014

• Counselvise Citation: 52023714 RSA 2014
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 10-09-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 06-06-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income
• Section: 148; 2

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.520/LKW/2014 ASSESSMENT YEAR 2004-05 INCOME TAX OFFICER 6(1) , ORAI (JALUN) CHURKHI ROAD, ORAI PIN 285 001 VS VINOD KUMAR CHADDHA THROUGH L/H PROP. BANARASI DAS & SONS, LAJPAT NAGAR KONCH, DISTRICT JALAUN PAN AERPC 2119 M (RESPONDENT) (APPELLANT) SHRI MANOJ BADAL, C.A. APPELLANT BY SHRI AMIT NIGAM, DR RESPONDENT BY 10/09/2015 DATE OF HEARING 29 / 10 /2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE O RDER OF LD. CIT (A)-I, KANPUR DATED 28.03.2014 FOR THE AY 2004-05. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. THE LD CIT (APPEALS)-!, KANPUR HAS ERRED IN L AW AND ON FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING THAT THE AS SESSMENT PROCEEDING INITIATED BY THE AO U/S 148 OF IT ACT IS VALID. 2. THE LD CIT (APPEALS)-I, KANPUR HAS GROSSLY ERRED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING T HE AMOUNT OF UNACCOUNTED SALES AT RS 12,40,104. 3. THE LD CIT (APPEALS)-I, KANPUR HAS GROSSLY ERRED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE IN ADDING GROSS PROFIT @ 16.33%, ON UN ACCOUNTED SALES , EVEN APPELLANT COVE RED U/S 44AF. 2 3. REGARDING GROUND NO. 1, I.E. VALIDITY OF REOPEN ING, LEARNED AR OF THE ASSESSEE REITERATED THE SAME CONTENTIONS, WHICH WERE RAISED BEFORE THE LD. CIT(A). REGARDING MERIT OF THE ADDITIONS MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A), HE SUBMITTED THAT THE ASSESSEES CASE IS COVERED BY SE CTION 44AF OF THE ACT AND WHEN AFTER INCLUDING THE UNDISCLOSED TURNOVER OF RS.12,4 0,104/- WITH THE DISCLOSED TURNOVER OF THE ASSESSEE OF RS.10,83,168/-, THE TOT AL TURNOVER COMES TO RS.23,23,272/-, WHICH IS LESS THEN RS.40.00 LAKH AS PERMITTED IN SECTION 44AF OF THE ACT AND THEREFORE, THE PROVISIONS OF SECTION 44AF A RE APPLICABLE. HE FURTHER SUBMITTED THAT THE ASSESSEE HAS DECLARED AN INCOME OF RS.84,340/- IN THE RETURN OF INCOME AND THEREFORE, EVEN AFTER THE ENHANCED TURNO VER IS CONSIDERED OF RS.23.23 LAKH, THE INCOME OF THE ASSESSEE CAN BE DETERMINED U/S 44AF AT RS.116,164/- BEING 5% OF THIS ENHANCED TURNOVER. REGARDING THE DIFFERE NCE IN CLOSING STOCK AS PER PROFIT AND LOSS ACCOUNT AND BALANCE SHEET, HE SUBMITTED TH AT ONCE SECTION 44AF IS APPLIED, THE ASSESSEE IS NOT REQUIRED TO MAINTAIN BOOKS OF A CCOUNTS AND THEREFORE, THIS ADDITION IS ALSO NOT CALLED FOR IN THE FACTS OF THE PRESENT CASE. LD. DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSION. WE FIND THAT THE LD. CIT(A) HAS REPRODUCED THE PROFIT AND LOSS ACCOUNT AND BALANCE SHEET OF THE ASSESSEE ON PAGES 5 AND 6 OF HIS ORDER AND AS PER THE SAME, IT IS SEEN THAT IN THE PROFIT AND LOSS ACCOUNT, THE ASSESSEE HAS SHOWN SALES OF RS.10,83,168/- AND CLOSING STOCK OF RS.5,42,131/-. IN THE BALANCE SHEET, THE ASSESSEE IS SHOWING CLOSI NG STOCK OF RS.7,462/- ONLY. HENCE CLOSING STOCK SHOWN BY THE ASSESSEE IN THE BA LANCE SHEET IS LESS THAN THE CLOSING STOCK SHOWN IN THE PROFIT AND LOSS ACCOUNT. THEREFORE, THIS IS NOT A CASE WHERE EXTRA ASSETS ARE SHOWN BY THE ASSESSEE IN THE BALANCE SHEET. IN FACT, THE ASSESSEE HAS SHOWN LESSER STOCK IN THE BALANCE SHEE T AS COMPARED TO THE STOCK SHOWN BY THE ASSESSEE IN THE PROFIT AND LOSS ACCOUN T. UNDER THESE FACTS, THE LESSER AMOUNT OF STOCK SHOWN BY THE ASSESSEE IN THE BALANC E SHEET CAN BE CONSIDERED AS SALE OUTSIDE THE BOOKS OF ACCOUNTS. IN FACT, THE AO HAS ALSO WORKED OUT THE SALE 3 OUTSIDE THE BOOKS AT RS.12,40,104/- WHICH IS MUCH M ORE THAN THE DIFFERENCE IN CLOSING STOCK IN THE PROFIT AND LOSS ACCOUNT AND BA LANCE SHEET. UNDER THESE FACTS, WE ARE OF THE CONSIDERED OPINION THAT DIFFERENCE IN ST OCK AS PER BALANCE SHEET AND PROFIT AND LOSS ACCOUNT IS TAKEN CARE BY IN OUT OF BOOKS S ALES OF RS.12.40 LAKH. THEREAFTER, WE FIND THAT IF WE ADD UP THE SALES DISCLOSED BY TH E ASSESSEE IN THE PROFIT AND LOSS ACCOUNT AND SALES OUTSIDE BOOKS WORKED OUT BY THE A O, THE TOTAL SALES COMES TO RS.23,23,272/-. 5. SECTION 44AF IS APPLICABLE IF THE ASSESSEE IS EN GAGED IN RETAIL TRADE AND HIS TURNOVER IS BELOW RS.40.00 LAKH IN THE PRESENT YEAR . THE TURNOVER OF THE ASSESSEE EVEN AFTER CONSIDERING THE UNACCOUNTED SALES IS LES S THAN RS.40.00 LAKH. REGARDING THIS ASPECT THAT WHETHER THE ASSESSEE IS ENGAGED IN RETAIL TRADE OR NOT, WE FIND THAT IT IS NOTED BY THE AO HIMSELF IN PARA 2 ON PAGE 1 OF T HE ASSESSMENT ORDER THAT ASSESSEE WAS ENGAGED IN THE RETAIL TRADING OF HARDW ARE, CEMENT AND OTHER ITEMS. HENCE, SECTION 44AF IS DEFINITELY APPLICABLE IN THE PRESENT CASE. AS PER SECTION 44AF OF THE ACT, THE INCOME OF THE ASSESSEE SHOULD BE DE TERMINED AT THE RATE OF 5% OF THE TURNOVER IF THE INCOME DECLARED BY THE ASSESSEE IS LESS THAN THIS AMOUNT. HENCE, BY APPLYING SECTION 44AF IN THE PRESENT CASE, WE HOLD THAT INCOME OF THE ASSESSEE FROM BUSINESS SHOULD BE ASSESSED AT RS.116,164/-. AS PER PROFIT AND LOSS ACCOUNT REPRODUCED BY THE LD. CIT(A) ON PAGE 5 OF HIS ORDER , THERE IS INTEREST INCOME OF RS.12,367/- WHICH SHOULD BE FURTHER ADDED TO THE IN COME DETERMINED U/S 44AF AT RS.116,164/- AND WHEN WE DO SO, THE TOTAL COMES TO RS.1,28,531/-. WE DIRECT THE AO TO ASSESS THE INCOME OF THE ASSESSEE ON THIS FIG URE AT RS.1,28,531/-. 6. REGARDING ADDITION OF RS.7,93,919/- MADE BY THE AO U/S 69B, WE ARE OF THE CONSIDERED OPINION THAT THIS ADDITION IS NOT JUSTIF IED BECAUSE THIS ADDITION HAS BEEN MADE BY THE AO ON THIS BASIS THAT THIS MUCH EXTRA C APITAL INVESTMENT IS REQUIRED BY THE ASSESSEE FOR EFFECTING THIS TURNOVER OF RS.12.4 0 LAKH OUTSIDE BOOKS. WE FIND NO MERIT IN THE SAME BECAUSE PART OF EXTRA TURNOVER OU TSIDE BOOKS IS ON ACCOUNT OF 4 SALES ON CLOSING STOCK SHOWN BY THE ASSESSEE LESS I N THE BALANCE SHEET AS COMPARED TO CLOSING STOCK SHOWN IN THE PROFIT AND LOSS ACCOU NT AND MOREOVER, WHEN THE ASSESSEE IS HAVING OPENING CAPITAL OF RS.6.93 LAKH AS NOTED BY THE AO ON PAGE NO. 3 OF THE ASSESSMENT ORDER AND THERE IS NO EVIDENCE BR OUGHT ON RECORD BY THE AO THAT ANY EXTRA INVESTMENT WAS IN FACT MADE BY THE ASSESS EE FOR EFFECTING THIS OUTSIDE BOOKS SALES, THIS ADDITION MADE BY THE AO U/S 69B I S NOT JUSTIFIED. WE, THEREFORE, DELETE THE SAME. AS A RESULT THE TOTAL INCOME OF TH E ASSESSEE SHOULD BE ASSESSED AT RS.1,28,531/- AS AGAINST RS.10,80,768/- DONE BY THE AO AS PER THE ASSESSMENT ORDER. 7. REGARDING GROUND NO.1 OF THE ASSESSEE IN RESPECT OF VALIDITY OF REOPENING, WE FIND NO MERIT THEREIN BECAUSE REOPENING HAS BEEN DO NE BY THE AO DUE TO DIFFERENCE IN THE FIGURE OF CLOSING STOCK IN THE PROFIT AND LO SS ACCOUNT AND BALANCE SHEET AND THEREFORE THIS GROUND IS REJECTED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/- SD/- (SUNIL KUMAR YADAV) (A.K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBE R DATED: 29/10/2015 AKS COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGI STRAR