Bhaveshbhai Kanaiyalal Chudasama, RAJKOT-GUJARAT V. The Income Tax Officer, Ward-2(4), JUNAGADH

ITA 542/RJT/2013

• Counselvise Citation: 54224914 RSA 2013
• Duration Of Justice: 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 09-01-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 31-12-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J B JHAVERI D R
• Assessee Lawyers: DR ADHIA
• Keywords: Peak credit

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT. BEFORE SHRI T. K. SHARMA JM AND SHRI B. R. JAIN AM ITA NO. 542/RJT/2013 / ASSESSMENT YEAR 2009-10. BHAVESHBHAI KANAIYALAL CHUDASAMA, PROP. OF JIVAN NAGJI GREAT CO., SHIVAJI NAGAR, SAVARKUNDLA, DIST.- AMRELI. PAN : AEQPC0700D ( / APPELLANT V/S THE I.T.O., WARD- 2(4), JUNAGARH. / RESPONDENT ! ' #$ / ASSESSEE BY SHRI D.R. ADHIA, C.A. % ! ' #$ / REVENUE BY SHRI J.B. JHAVERI, D.R. # & ' ! ( / DATE OF HEARING 09/01/2014 ) ! ( / DATE OF PRONOUNCEMENT 10/01/2014 / ORDER PER B. R. JAIN, A. M. : THIS APPEAL BY THE ASSESSEE AGAINST THE ORDER DATE D 21/11/2013 OF DR. K. SHRINIVAS REDDY, LEARNED CIT(A)-IV, RAJKOT. IN VARIOUS GROUNDS, THE ASSESSEE CHALLENGES THE ADDITION OF RS. 21,18,119/- WITHOUT CONSIDERING THE FACTS AND LAW. THE ASSESSEE HAS ALSO CHALLENGED THE SUSTENANCE OF LUMP SUM DISALLOWANCE OF RS. 15,380/- OUT OF OFFICE EXPENSES, VEHICLE EXPENSES, TRAVELLING EXPENSES AND TELEPHONE EXPENSE S. 2. BRIEFLY THE FACTS ARE THAT THE ASSESSEE IS TRADI NG IN MACHINE SCALES AND HAS DECLARED INCOME OF RS. 1,04,820/-. DURING T HE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER DISCO VERED THAT THERE IS A SAVINGS BANK ACCOUNTS NO. 30314530790 WITH STATE BA NK OF INDIA, STATION ROAD, SAVARKUNDLA. SINCE THIS ACCOUNT WAS NOT FOUND DISCLOSED, THE A.O. REQUIRED THE ASSESSEE TO SHOW CAUSE AS TO WHY THE D EPOSITS AGGREGATING TO RS. 21,18,119/- BE NOT ADDED TO THE INCOME OF TH E ASSESSEE AS THE ITA 542/RJT/2013 2 UNACCOUNTED TRANSACTIONS. IN RESPONSE THERETO, THE ASSESSEE FILED WRITTEN REPLY REPRODUCED AT PARA 4.1 AND 4.3 OF THE ASSESSM ENT ORDER AND CLAIMED THAT THE TRANSACTION IN THE AFORESAID BANK ACCOUNT RELATE TO HIS HUF BUSINESS, WHICH IS SEPARATELY ASSESSED TO INCOME TA X. THE PAN NUMBER AND BALANCE SHEET ETC. OF THE HUF WERE ALSO LAID ON RECORD ALONGWITH COPIES OF IT RETURN. THE SAID HUF WAS CLAIMED TO HA VE BEEN CARRYING THE WHEAT BUSINESS. IT WAS ALSO STATED THAT THE SAID HU F HAS DECLARED NET PROFIT OF 1.44% FROM THE WHEAT BUSINESS AND THAT ST ANDS ADMITTED IN THE ASSESSMENT OF THE SAID HUF. THE A.O. DID NOT FIND T HIS REPLY CONVINCING. ACCORDINGLY HE PROCEEDED TO TREAT THE ENTIRE AMOUNT OF RS. 21,18,119/- AS THE INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSI DERATION AS UNACCOUNTED CASH U/S 69A OF THE ACT. 3. THE LD. CIT(A) CONFIRMED THE ADDITION. 4. SHRI D.R. ADHIA, LD. COUNSEL FOR THE ASSESSEE A SSAILING THE ADDITION, CONTENDS THAT THE LOWER AUTHORITIES HAVE FAILED TO APPRECIATE THE ISSUE IN RIGHT PERSPECTIVE. THIS WAS NOT A CASH CREDIT, ON W HICH, PROVISIONS OF SECTION 69A OF THE ACT COULD BE INVOKED. PERUSAL OF THE SAID BANK ACCOUNT LAID ON RECORD REVEALS THAT THERE WAS A CLOSING BA LANCE ONLY OF RS. 34,161/- AND THE RECEIPTS AND PAYMENTS THEREIN ARE RELATABLE TO THE PURCHASE AND SALE OF WHEAT, WHICH IS THE BUSINESS O F ASSESSEES HUF. EVEN THE PEAK CREDIT WORKS OUT TO RS. 94,800/-. THE ADDITION SO MADE, THEREFORE, IS UNWARRANTED AND UNCALLED FOR. THE SAM E IS REQUIRED TO BE DELETED. IN THE ALTERNATIVE, PROVISIONS OF SECTION 44AF OF THE ACT MAY BE APPLIED AND INCOME ESTIMATED ON THIS BUSINESS TRANS ACTIONS AS THE ASSESSEE HAS DISCHARGED THE ONUS THAT LAY UPON HIM. THE ASSESSEE HAS PLACED RELIANCE ON THE DECISION OF THE HONBLE GUJA RAT HIGH COURT IN THE CASE OF R.R. CARRYING CORPORATION (126 TTJ (CTK) 24 0) AND THE DECISION OF RAJKOT BENCH OF THE TRIBUNAL IN THE CASE OF GOPALBH AI GORDHANBHAI GORASIA IN ITA NO. 540/RJT./2013. ITA 542/RJT/2013 3 5. ON THE OTHER HAND, THE LD. D.R. PLACED STRONG RE LIANCE ON THE FINDINGS AND CONCLUSIONS REACHED BY THE AUTHORITIES BELOW. 6. HEARD PARTIES WITH REFERENCE TO MATERIAL ON RECO RD AND THE CASE LAWS BROUGHT TO OUR NOTICE. THE COPY OF THE BANK ACCOUNT LAID ON RECORD REVEALS THAT THE CREDIT BALANCE AS ON 26/3/2009 AND CONTINU ED TILL 31/03/2009 STRIKES AT AN AMOUNT OF RS. 34161/- ONLY. THE ENTIR E DEPOSITS AND WITHDRAWALS WERE CLAIMED TO BE RELATABLE TO THE WHE AT BUSINESS, WHICH WAS BUSINESS OF THE HUF. THE DOCUMENTS LAID ON RECORD W ITH RESPECT TO THE HUF DO NOT REVEAL DISCLOSURE OF THIS ACCOUNT IN THE SAID HUF AS WELL. SINCE THE TRANSACTIONS OF DEBIT AND CREDIT RELATED TO THE WHEAT BUSINESS, THE ASSESSEE SOUGHT TO APPLY THE SAME PROFIT RATE OF 1. 44% AS WAS DONE IN THE HANDS OF THE HUF AND REDUCE THE ADDITION ACCORDINGL Y. AS THE ASSESSEE HAD DISCHARGED THE ONUS TO THE FACT THAT THE TRANSA CTIONS IN THE SAID BANK ARE RELATABLE TO THE WHEAT BUSINESS SINCE THE PEAK CREDIT HAS BEEN ADMITTED TO BE MORE THAN THE PROFIT THAT MAY WORK O UT BY APPLYING PROFIT RATE OF 1.44%, WE CONSIDER IT APPROPRIATE TO ASSES S INCOME BY APPLICATION OF NET PROFIT RATE OF 5% ON THE ENTIRE DEPOSITS OF RS. 21,18,119/- APPEARING IN THE SAID UNDECLARED BANK ACCOUNT BY TREATING THE SAME AS TRANSACTIONS OF BUSINESS CARRIED BY THE ASSESSEE OUTSIDE THE BOO KS OF ACCOUNT. SECTION 69A OF THE ACT WILL NOT BE APPLICABLE TO SUCH TRANS ACTIONS. ACCORDINGLY, THE ADDITION OF RS. 1,06,000/- IS SUSTAINED AND BALANCE OF ADDITION IS DIRECTED TO BE DELETED. 7. AS REGARDS THE ASSESSEES GRIEVANCE FOR SUSTENAN CE OF DISALLOWANCE ON ACCOUNT OF EXPENSES FOR RS. 15,380/- BEING 20% O F THE EXPENSES MADE ON AD HOC BASIS, WE DO NOT FIND ANY JUSTIFICATION I N SUSTAINING SUCH DISALLOWANCE AS THE EXPENSES ARE FOUND TO HAVE BEEN INCORRECT FOR BUSINESS PURPOSES. DISALLOWANCE SO SUSTAINED IS DIR ECTED TO BE DELETED. ITA 542/RJT/2013 4 8. IN THE RESULT, APPEAL BY ASSESSEE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10/01/2014 SD/- SD/- ( T. K. SHARMA ) ( B. R. JAI N ) #*% /JUDICIAL MEMBER $( #*% / ACCOUNTANT MEMBER *$+ ,*-/ ORDER DATE 10/01/2014 /RAJKOT *RANJAN / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT- BHAVESHBHAI KANAIYALAL CHUDASAMA, AMRE LI. . 2. /RESPONDENT- THE I.T.O., WARD-2(4), JUNAGARH. 3. #-2- & 3 / CIT-I, RAJKOT. 4. & 3 - / CIT (A)-IV, RAJKOT. 5. 789 , , / DR, ITAT, RAJKOT 6. 9; <= / GUARD FILE. *$+ #$ / BY ORDER , TRUE COPY PRIVATE SECRETARY, , INCOME TAX APPELLATE TRIBUNAL, RAJKOT.