SHRI RAMASWAMY NOHOHARAN, Indore V. THE ITO 4(1), Indore

ITA 526/IND/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5946 (ITAT-INDORE)
• Duration Of Justice: 11 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 20-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 10-07-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED
• Assessee Lawyers: GIRISH AGRAWAL; VIJAY BANSAL CAS
• Keywords: Unexplained investment; Business income; Peak credit

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE (SINGLE MEMBER CASE) BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER I.T.A.NO.526/IND/2015 A.Y. : 2009-10 SHRI RAMASWAMY MANOHARAN ITO, 3/54, KALALI MOHALLA, VS 4(1), INDORE. INDORE APPELLANT RESPONDENT PAN NO. AGKPM9960D A PPELLANT BY : SHRI GIRISH AGRAWAL AND SHRI VIJAY BANSAL, CAS RESPONDENT BY : SHRI MOHD. JAVED, DR O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A)-II, INDORE, DATED 27.02.2015 FOR THE ASSE SSMENT YEAR 2009-0. DATE OF HEARING : 20 .0 6 20 16 DATE OF PRONOUNCEMENT : 20 .0 6 . 201 6 SHRI RAMASWAMY MANOHARAN, INDORE VS. ITO, 4(12), IN DORE I.T.A.NO. 526/IND/2015 A.Y. 2009-10 2 2 2. THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSEE F ILED RETURN OF INCOME ON 11.12.2009 DECLARING TOTAL INCO ME AT RS. 1,80,510/-. DURING THE ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE HAS DEPOSITED CASH OF RS. 42,59,9 00/- IN SAVING BANK ACCOUNT MAINTAINED WITH CORPORATION BANK , INDORE. THE ASSESSEE WAS ASKED TO PRODUCE THE DETAIL S OF BANK ACCOUNT OWNED BY HIM AND DETAILS OF BUSINESS INCOME EARNED DURING THE YEAR. THE ASSESSEE HAS NOT DISCLOSED TH E CORPORATION BANK ACCOUNT TO THE DEPARTMENT AND THE ASSESSEE WAS ASKED TO EXPLAIN THE CREDIT CARD EXPEND ITURE OF RS. 2,14,644/-. THEREAFTER, THE AO HAS RECORDED THE STATEMENT AND AFTER CONSIDERING THE REPLY, THE AO HAS MADE TH E ADDITION. THE AO WAS OF THE VIEW THAT THE ASSESSEE WAS DOING TR ADING BY CREDITING THE AMOUNT IN THE BANK AND THE SAME WAS TR EATED THE TURNOVER OF SABUDANA BUSINESS INDIRECTLY CARRIE D OUT BY THE ASSESSEE AND PROFIT @ 5%ON SALES OF RS. 42,59,9 00/- WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. AT THE R ELEVANT TIME, THE ASSESSEE CONTENDED THAT THE ASSESSEE WAS RECOVER ING THE MONEY ON BEHALF OF THE PERSONS AND HE HAS EARNED ON LY SHRI RAMASWAMY MANOHARAN, INDORE VS. ITO, 4(12), IN DORE I.T.A.NO. 526/IND/2015 A.Y. 2009-10 3 3 COMMISSION INCOME OF RS. 88,500/-, BUT THE AO DISBE LIEVED THE SAME AND MADE THE ADDITION OF RS. 2,12,995/-. 3. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CI T(A) HAS DISMISSED THE APPEAL. 4. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS FILED THE WRITTEN SUBMISSION, WHEREIN HE CONTENDED TH AT HE IS TRADING IN SABUDANA ON HIS OWN ACCOUNT AND HE HAS AL SO AGENCY BUSINESS ON THE BASIS OF COMMISSION, WHICH IS DIRECTLY SOLD BY MANUFACTURER TO THE BUYER. THE ASSESSEE GET THE ORDERS PROCURED FROM THE BUYERS WHICH ARE PASSED ON TO THE MANUFACTURERS. THE MANUFACTURERS DIRECTLY SUPPLY SA BUDANA TO BUYER AND MANUFACTURER ISSUE THEIR SALE BILLS TO RESPECTIVE BUYERS. THE ASSESSEE ACTS AS COLLECTION AGENT OF MA NUFACTURER AND COLLECT THE SALE PROCEEDS FROM THE BUYERS. HENC E, ON COLLECTION OF SALES PROCEEDS, THE SAME IS DEPOSITED THROUGH BANKING WITH MANUFACTURER AFTER RETAINING THE COMMIS SION. THE ASSESSEE HAS EARNED THE COMMISSION OF RS. 88,50 0/-, WHICH IS OFFERED FOR TAXATION. THE ASSESSEE ALSO REC EIVED CONFIRMATION. THEREFORE, THE AO AND LD. CIT(A) IS N OT JUSTIFIED SHRI RAMASWAMY MANOHARAN, INDORE VS. ITO, 4(12), IN DORE I.T.A.NO. 526/IND/2015 A.Y. 2009-10 4 4 IN TREATING THIS COMMISSION INCOME AS TRADING INCOM E OF THE ASSESSEE. 5. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON TH E ORDERS OF THE AUTHORITIES BELOW. 6. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PART IES. I HAVE ALSO GONE THROUGH THE ORDER OF THE AO. BEFORE THE AO, THE ASSESSEE HAS GIVEN THE CONFIRMATION LETTERS FROM TH E PARTIES THAT HE HAS COLLECTED THE MONEY ON BEHALF OF MANUFA CTURER, BUT THE ASSESSEE HAS NOT DEDUCTED TDS. THE ASSESSEE WAS ASKED TO PRODUCE THE SALE BILLS, EXPENSES VOUCHERS AND OTHER RELEVANT DOCUMENTS. THE ASSESSEE DID NOT MAINTAIN A NY DOCUMENT IN RESPECT OF COMMISSION INCOME. THE AO HA S ISSUED THE LETTERS TO THE PARTIES FROM WHOM THE ASSE SSEE HAS RECEIVED NOMINAL COMMISSION. MOST OF THE LETTERS WER E RECEIVED BACK UNSERVED WITH THE REMARKS THAT THE PARTIES DID NOT EXIST. ONE SHRI ANIL KUMAR MANOHARLAL HAS REFUSED OF ANY TRANSACTION OF SALE OR PURCHASE HAS BEEN MADE. SIMI LARLY, RIDDHI SIDDHI STORES ALSO DENIED THE SAME. THEREFO RE, THE AO WAS OF THE VIEW THAT THIS IS ASSESSEES BUSINESS AND IT WAS TREATED AS THE TURNOVER OF THE ASSESSEE. THE AO HAS TREATED THE SHRI RAMASWAMY MANOHARAN, INDORE VS. ITO, 4(12), IN DORE I.T.A.NO. 526/IND/2015 A.Y. 2009-10 5 5 SALES AND PROFIT TAKEN AT 5%, WHICH IS ON HIGHER SID E. THEREFORE, I DIRECT THE AO TO CHARGE THE PROFIT @ 3 % INSTEAD OF 5%. THE ASSESSEE HAS ALSO CONTENDED BEFORE ME THAT IT IS NOT THE TURNOVER, BUT LOOKING TO THE SMALLNESS OF THE A MOUNT AND WHEN THE PARTIES DENIED, I AM OF THE VIEW THAT IF I E STIMATE THE PROFIT @ 3%, IT WILL MEET THE ENDS OF JUSTICE. THERE FORE, THE AO IS DIRECTED ACCORDINGLY. 7. REGARDING SUSTENANCE OF THE ADDITION OF RS. 44,000/ - U/S 69 AS UNEXPLAINED INVESTMENT CONSIDERING IT AS PEAK CREDIT OF DEPOSITS OF CASH IN THE BANK ACCOUNT, SIN CE THE PROFIT HAS BEEN ESTIMATED AT 3% AND THE ASSESSEE HAS CONTE NDED THAT IT IS NOT TURNOVER, NO QUESTION OF ADDING PEAK CREDIT. THIS ADDITION IS DELETED. 8. NEXT GROUND IS AGAINST THE SUSTAINING THE ADDITION OF RS. 21,000/- ON ACCOUNT OF HOUSE HOLD WITHDRAWAL. 9. THE AO MADE THE ADDITION OF RS. 25,000/- ON ACCOUNT OF LOW HOUSE HOLD WITHDRAWALS. THE AO MENTIONED THAT T HE ASSESSEE HAS SHOWN HOUSE HOLD WITHDRAWAL OF RS. 75,000 /- ONLY EXCLUDING SCHOOL FEE. THEREFORE, THE SAME WAS E STIMATED AT RS. 1 LAC AS AGAINST RS. 75,000/-. ON APPEAL TO THE LD. SHRI RAMASWAMY MANOHARAN, INDORE VS. ITO, 4(12), IN DORE I.T.A.NO. 526/IND/2015 A.Y. 2009-10 6 6 CIT(A), HE ESTIMATED THE HOUSE HOLD EXPENSES @ RS.8 000/- PER MONTH AND RESTRICTED THE ADDITION TO RS. 21,000/-. 10. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE CONTENDED THAT THE ASSESSEE HAS A SMALL FAMILY. THE CAPITAL ACCOUNT CONTAINS DETAILS OF VARIOUS EXPENSES MADE O N LIC PREMIUM, SCHOOL FEE, MEDICAL INSURANCE, RENT PAID, INTEREST PAID, CREDIT CARD EXPENSES FOR PERSONAL USE, OVER A ND ABOVE THE HOUSE HOLD EXPENSES. EVEN THE AO COULD NOT BRING AN Y SPECIFIC REASON FROM WHERE SHE COULD GET THE STATUS OF FAMILY DESPITE DETAILS OF ALL THESE EXPENSES/PAYMENTS IN THE CAPIT AL ACCOUNT. THUS, THE ADDITION IS PURELY ON THE BASIS OF ESTIMA TION WHICH OUGHT TO BE DELETED. 11. LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 12. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PART IES. ON PERUSING THE CAPITAL ACCOUNT WHICH IS PLACED ON PAGE 33 OF THE PAPER BOOK, I FOUND THAT THE SAME CONTAINS DETA ILS OF VARIOUS EXPENSES MADE ON LIC PREMIUM, SCHOOL FEE, M EDICAL INSURANCE, RENT PAID, INTEREST PAID, CREDIT CARD EX PENSES FOR PERSONAL USE, OVER AND ABOVE HOUSE HOLD EXPENSES. I , SHRI RAMASWAMY MANOHARAN, INDORE VS. ITO, 4(12), IN DORE I.T.A.NO. 526/IND/2015 A.Y. 2009-10 7 7 THEREFORE, DELETE THE ADDITION OF RS. 21,000/- ON A CCOUNT OF HOUSE HOLD EXPENSES. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. THIS ORDER HAS BEEN PRONOUNCED IN THE OP EN COURT ON 20 TH JUNE, 2016, SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 20 TH JUNE, 2016. CPU*