ARVIND G. JOGANI, MUMBAI V. ITO 16(1)(4), MUMBAI

ITA 5360/MUM/2011

• Counselvise Citation: 536019914 RSA 2011
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 15-07-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SATBIR SINGH
• Keywords: Business income
• Section: 143(3); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, SMC, MUMBAI BEFORE SHRI R V EASWAR, PRESIDENT I T A NO: 5360/MUM/2011 (ASSESSMENT YEAR: 2006-07) MR ARVIND G JOGANI, MUMBAI APPELLANT (PAN: AACPJ5667N) VS INCOME TAX OFFICER 16(1)(4), MUMBAI RESPONDENT ASSESSEE BY: MR H N MOTIWALLA / MR PIYUSH CHHAJED REVENUE BY: MR SATBIR SINGH DATE OF HEARING: 13 TH SEPTEMBER 2011 DATE OF PRONOUNCEMENT: 16 TH SEPTEMBER 2011 O R D E R THIS APPEAL IS BY THE ASSESSEE AND IT RELATES TO T HE ASSESSMENT YEAR 2006-07. THE ASSESSEE IS AN INDIVIDUAL DERIVI NG SALARY AND BUSINESS INCOME FROM M/S POOJA COMPUTERS AND ALSO I NCOME FROM OTHER SOURCES. 2. THE ONLY ISSUE IN THE APPEAL IS WHETHER THE DEPA RTMENTAL AUTHORITIES WERE JUSTIFIED IN MAKING AN ADDITION OF ` 3,66,580/- (WRONGLY MENTIONED IN THE GROUNDS OF APPEAL AS ` 36,65,800/-) TO THE BUSINESS INCOME OF THE ASSESSEE. 3. ON THE BASIS OF INFORMATION RECEIVED THROUGH THE AIR, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO PRODU CE HIS BANK ACCOUNTS. FROM THE BANK ACCOUNT OF THE ASSESSEE WI TH HSBC BANK, HE NOTICED THAT THERE WERE CASH DEPOSITS AGGREGATIN G TO ` 36,65,801/-. THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO E XPLAIN THE SOURCE 2 ITA NO: 5360/MUM/2011 OF SUCH DEPOSITS AND ALSO PRODUCE SUPPORTING EVIDEN CE. INITIALLY THE ASSESSEE WOULD APPEAR TO HAVE STATED THAT THE DEPOS ITS WERE MADE FROM THE WITHDRAWALS FROM THE SAME ACCOUNT. HOWEVE R, THEREAFTER A STATEMENT WAS RECORDED UNDER SECTION 131 ON 5 TH DECEMBER 2008 FROM THE ASSESSEE, IN WHICH HE STATED THAT HE WAS ENGAGE D IN LIAISONING BUSINESS IN SALE AND PURCHASE OF COMPUTER PARTS, WH ICH WAS NOT DISCLOSED IN THE RETURN AND THAT THE CASH DEPOSITS WERE RELATED TO THIS BUSINESS FROM WHICH HE DERIVED 3% COMMISSION INCOME . A REVISED COMPUTATION WAS FILED BY THE ASSESSEE, IN WHICH HE DISCLOSED 3% OF THE AGGREGATE DEPOSITS OF ` 36,65,801/- AS HIS INCOME. 4. THE ASSESSING OFFICER DEALT WITH THE ASSESSEES CLAIM IN THE FOLLOWING WORDS: - THE SUBMISSION MADE BY THE ASSESSEE IS CONSIDERED CAREFULLY. HOWEVER, IN THE ABSENCE OF ANY SALE / PURCHASE DETAILS, THE ESTIMATED PROFIT OFFERED @ 3% BY THE ASSESSEE IS NOT ACCEPTABLE. HENCE, I ESTIMATE THE PROFIT @ 10% OF THE CASH DEPOSIT MADE AS HIS INCOME FROM COMMISSION. THE ASSESSEES REQUEST TO NOT TO INITIATE PENALTY PROCEEDINGS IS ALSO REJECTED AS THE ASSESSEE MADE VOLUNTARY DISCLOSURE ONLY AFTER SCRUTINY PROCEEDINGS U/S. 143(3) STARTED. PENALTY U/S. 271(1)(C) R.W.S. 274 IS INITIATED SEPARATELY FOR CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME. ACCORDINGLY HE BROUGHT AN AMOUNT OF ` 3,66,580/- AS COMMISSION INCOME, BEING 10% OF THE AGGREGATE DEPOSITS OF ` 36,65,800/-. 5. THE ASSESSEES APPEAL TO THE CIT(A) BEING UNSUCC ESSFUL, HE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. I HAVE CARE FULLY CONSIDERED THE 3 ITA NO: 5360/MUM/2011 FACTS AND THE RIVAL CONTENTIONS. IN THE COURSE OF THE HEARING, THE LEARNED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED T HAT IN ALL THE SUBSEQUENT ASSESSMENT YEARS THE ASSESSING OFFICER H AS ACCEPTED COMMISSION INCOME AT 5% OF THE CASH DEPOSITS AND IN SUPPORT OF THIS SUBMISSION HAS FILED A COPY OF THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2007-08. THIS IS AN ASSESSMENT ORD ER DATED 29 TH DECEMBER 2009 PASSED UNDER SECTION 143(3) OF THE IN COME TAX ACT, 1961. IN PARAGRAPH 5 OF THE SAID ORDER, THERE IS A DISCUSSION OF THE COMMISSION INCOME ON THE HSBC ACCOUNT DEPOSITS AND AS TO WHAT SHOULD BE THE PROPER RATE OF COMMISSION TO BE ASSES SED. FINALLY THE ASSESSING OFFICER HAS ACCEPTED 5% OF THE CASH DEPOS ITS AS THE COMMISSION INCOME. IT IS STATED BEFORE ME THAT IN THE SUBSEQUENT YEARS ALSO THE ASSESSING OFFICER HAS ADOPTED 5% AS COMMISSION INCOME. CONSIDERING THIS, I AM OF THE OPINION THAT THE DEPARTMENTAL AUTHORITIES WERE NOT JUSTIFIED IN ADOPTING 10% OF T HE CASH DEPOSITS IN THE HSBC ACCOUNT AS THE COMMISSION INCOME OF THE AS SESSEE FOR THE YEAR UNDER APPEAL. I DIRECT THE ASSESSING OFFICER TO ADOPT 5% OF THE CASH DEPOSITS OF ` 36,65,800/- AS THE COMMISSION INCOME OF THE ASSESSEE FOR THE YEAR UNDER APPEAL. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. NO COSTS. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH SEPTEMBER 2011. SD/- ( R V EASWAR ) MUMBAI, DATED 16 TH SEPTEMBER 2011 PRESIDENT SALDANHA 4 ITA NO: 5360/MUM/2011 COPY TO: 1. MR ARVIND G JOGANI 601/A, GOKULDHAM CHSL, SANE GURUJI MARG TULSIWADI, MUMBAI 400 034 2. ITO 16(1)(4), MUMBAI 3. CIT-14, MUMBAI 4. CIT(A)-25, MUMBAI 5. DR SMC BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI