Shri Nareshchandra L.Methwani, Surat V. The Income tax Officer,Ward-3(4), Surat

ITA 544/AHD/2011

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9708 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 16-06-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 23-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Assessee Lawyers: M K SHAH
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: S H RI G. D. AGRAWAL , VICE PRESIDENT AND SHR I RAJPAL YADAV , JUDICIAL MEMBER SHRI NARESHC HANDRA L. METHWANI, 24 - B, KRISH N A NAGAR SOCIETY, RANDER ROAD, SURAT PAN: ACAPM0555G (APPELLANT) VS THE INCOME TAX OFFICER, WARD - 3(4), SURAT (RESPONDENT) ASSESSEE BY: S H RI M.K. SHAH , A.R. REVENUE BY: S MT. SONIA KUMAR , SR. D.R. DATE OF HEARING : 16 - 06 - 2 015 DATE OF PRONOUNCEMENT : 17 - 07 - 2 015 / ORDER P ER : RAJPAL YADAV , JUDICIAL MEMBER : - ASSSESSEE IS IN APPEAL BEFORE US AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 5 TH JANUARY, 2011 PASSED FOR ASSESSMENT YEAR 2007 - 08. 2. THE SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 6,96,830/ - . I T A NO . 544 / A HD/20 11 A SSESSMENT YEAR 200 7 - 08 I.T.A NO. 544 /AHD/20 11 A.Y. 2007 - 08 PAGE NO. SHRI NARESHCHANDRA L. METHWANI VS. ITO 2 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS AN INDIVIDUAL. HE WAS RUNNING A CANTEEN AT THE RELEVANT TIME. HE HAS SHOWN TRANSPORT BUSINESS ACTIVITY BY PLYING TRUCKS IN HIS HUF CAPACITY. HE HAS FILED RETURN OF HIS INCOME ON 21 - 08 - 2007 DECLARING TOTAL INCOME OF RS. 14,460/ - . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND A NOTICE U/S. 143(2) DATED 4 TH AUGUST, 2008 WAS ISSUED AND SERVED UPON THE ASSESSEE. ON SCRUTINY OF THE AC COUNTS, IT REVEALED TO THE ASSESSING OFFICER THAT CASH AGGREGATING TO RS . 6,96,830/ - WAS FOUND TO BE DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE. LD. ASSESSING OFFICER OBSERVED THAT IN FOUR DAYS I.E. 5 TH APRIL 2006 TO 8 TH APRIL, 2006 A SUM OF RS. 7,32,0 00/ - WAS DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE. IN RESPONSE TO THE QUERY OF ASSESSING OFFICER , THE ASSESSE CONTEND ED THAT IN HIS HUF , HE HAS DONE TRANSPORT BUSINESS . THE RETURN OF HUF WAS FILED WHEREIN HE HAS SHOWN PLYING OF TWO TRUCKS FOR 11 MON THS AND PLYING OF ANOTHER TWO TRUCKS FOR 5 MONTHS. THE ASSESSEE HAS CLAIMED TDS OF RS. 42,351 IN HIS HUF RETURN. ACCORDING TO THE ASSESSE , HE HAS TRANSPORTED THE GOODS OF ROHANA TRANSPORT WHO HAS MADE PAYMENT OF RS. 37,74,652/ - A FTER DEDUCTI NG TDS. T HE CREDIT OF THIS TDS AMOUNT HAS BEEN CLAIMED. THE ASSESSEE FURTHER CONTENDED THAT SINCE HE WAS PLYING TRUCKS , HIS TOTAL RECEIPTS DID NOT EXCEED THE MONETARY LIMIT PROVIDED IN SECTION 44AE , THEREFORE , HE WAS NOT REQUIRED TO MAINTAI N ANY BOOKS OF ACCOUNTS AND HE H AS OFFERED INCOME U/S. 44AE. ACCORDING TO THE ASSESSEE , THE AMOUNT S REMAINED UNREALIZED WERE GIVEN TO HIM IN BETWEEN 5 TH APRIL TO 8 TH APRIL , OUT OF WHICH DEPOSITS HAVE BEEN MADE. THE ASSESSEE HAS SUBMITTED THE DETAILS OF THE PERSONS FROM WHOM AMOUNT S HAVE BEEN RECEIVED. THESE DETAILS ARE AVAILABLE ON PAGE NO. 22 OF THE PAPER BOOK. THE ASSESSEE HAS NAMED SIX TRANSPORTERS NAMELY ; J.K. TRANSPORT, KAPIL TRANSPORT, KRISHNA TRANSPORT, S AI BABA TRANSPORT, SHREE SAI AASHISH AND SNEHALI TRANSPORT. HE HAS G IVEN THEIR COMPLETE DETAILS I.T.A NO. 544 /AHD/20 11 A.Y. 2007 - 08 PAGE NO. SHRI NARESHCHANDRA L. METHWANI VS. ITO 3 AND PAN NO. ACCORDING TO THE ASSESSEE, THE AMOUNTS HAVE BEEN RECE IVED FROM THESE TRANSPORTERS WHICH HAVE BEEN DEPOSITED IN THE BANK ACCOUNT. 4. THE LD. ASSESSING OFFICER REJECTED THE CLAIM OF ASSESSEE ON THE GROUND THAT WHEN RETURN OF INCOME WAS FILED U/S. 44AE IN THE CASE OF HUF , THEN , IT IS TO BE FILED ON CASH BASIS AND NOT ON MERCANTILE BASIS. IF THE ASSESSEE IS NOT MAINTAINING ANY BOOKS OF ACCOUNTS , THEN , EXISTENCE OF SUNDRY CREDITOR S /DEBTORS NOT BE ACCEPTED. ACCORDINGLY , LD. ASSESSING OFFICER TREATED THE AMOUNT DEPOSITED IN THE BANK AS UNEXPLAINED CREDITS AND MADE THE ADDITION. 5. APPEAL TO THE COMMISSIONER OF INCOME TAX (APPEALS) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 6. WITH THE ASSISTANCE OF LD. REPRESENTATIVES , WE HAVE GONE THROUGH THE RECORD CAREFULLY. SECTION 68 OF THE INCOME TAX ACT PROVIDES THAT WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE TH EREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THEN, THE SUMS SO CREDITED MAY BE CHARGED TO INCOME TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. THERE IS NO DISPUTE THAT AMOUNTS IN CASH HA VE BEEN DE POSITED IN THE BANK ACCOUNT OF THE ASSESSE E. IN ORDER TO EXPLAIN THE SOURCE OF THE DEPOSIT S , THE ASSESSEE C ONTENDED THAT HE HAS DONE TRANSPORT BUSINESS IN HIS HUF CAPACITY. HE HAS SUNDRY DEBTORS WHO HAVE REMITTED THE MONEY IN THIS ACCOUNTING YE AR. THE ASSESSEE HAS FIL ED COPY OF THE RETURN IN THE HUF CAPACITY AND ALSO SUBMITTED COMPLETE DETAILS OF SUNDRY DEBTORS. THESE ARE I.T.A NO. 544 /AHD/20 11 A.Y. 2007 - 08 PAGE NO. SHRI NARESHCHANDRA L. METHWANI VS. ITO 4 SIX IN NO. HE HAS GIVEN THEIR ADDRESSES, AND PAN NO. THE REASON ASSIGNED BY THE ASSESSING OFFICER FOR DISBELIEVING IS TH AT RETURN IN THE CASE OF HUF FILED U/S. 44AE OUGHT TO BE BASED ON CASH SYSTEM OF ACCOUNTING AND IF THAT BE SO, THERE CANNOT BE ANY EXISTE NCE OF ALLEGED SUNDRY DEBTORS. TO OUR MIND, THAT CAN BE A POSITION IN LAW BUT IF SOMEBODY FLOUTED THE LAW, THEN, CA N E XISTENCE OF FACT BE IGNORED? THE EXISTENCE OF THE SUNDRY DEBTORS, ACCORDING TO THE ASSESSEE, IS A HARD FACT. HE HAS SUBMITTED THEIR LIST, THEIR ADDRESSES AND THEIR PAN NO. NOW, THE QUESTION WHETHER ASSESSEE COU LD HAVE ACCOUNTED THESE AMOUNTS I.E. T HE AMO UNTS REPRESENTING SUNDRY DEBTORS IN THE RETURN OF HUF , IS AN ALTOGETHER DIFFERENT QUESTION FOR THE ASSESSMENT OF HUF. THE ASSESSING OFFICER MIGHT HAVE EXCLUDED THESE AMOUNT S FROM THE TOTA L RECEIPT S ON THE GROUND THAT THE S E WERE NOT REALIZED BY THE ASSESSE E BUT THAT WOULD NOT FALSIFY THE SOURCE OF DEPOSIT. THEREFORE, THE AMOUNTS ARE NOT UNEXPLAINED SIMPLY FOR THE REASON THAT THESE COULD NOT HAVE BEEN ACCOUNTED IN THE TOTAL RECEIPTS OF THE HUF WHILE OFFERING INCOME U/S. 44AE. THE AMOUNT CANNOT BE TREATED A S UNEXPLAINED CREDIT OF THE ASSESSEE. WE ALLOW THIS GROUND OF APPEAL AND DELETE THE ADDITION. 7 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PR ONOUNCED IN THE OPEN COURT ON 17 - 07 - 2015 SD/ - SD/ - ( G.D. AGRAWAL ) ( RAJPAL YADAV ) VICE PRESIDENT JUDICIAL MEMBER AHMEDABAD : DATED 17 /07 /2015 AK I.T.A NO. 544 /AHD/20 11 A.Y. 2007 - 08 PAGE NO. SHRI NARESHCHANDRA L. METHWANI VS. ITO 5 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,