SH. WASEEM AHMED KHAYEEB, SRINAGAR V. INCOME TAX OFFICER, WARD 3(3), SRINAGAR

ITA 556/ASR/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7974 (ITAT-AMRITSAR)
• Duration Of Justice: 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 28-08-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Opportunity of being heard; Reassessment proceedings
• Section: 143(3); 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR (SMC) BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER I.T.A. NO. 556/(ASR)/2017 AS SESSMENT YEAR: 2007-08 WASEEM AHMAD KHATEEB, PROP. OF BRIJESH INDUSTRIES, INDUSTRIAL ESTATE, SANAT NAGAR SRINAGAR KASHMIR [PAN: ACXPK 8627J] VS. INCOME TAX OFFICER, WARD 3(3), SRINAGAR KASHMIR (APPELLANT) (RESPONDENT) APPELLANT BY : SH. WRITTEN SUBMISSION RESPONDENT BY: SH. CHARAN DASS (D.R.) DATE OF HEARING: 02.04.2018 DATE OF PRONOUNCEMENT: 12.04.2018 ORDER PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-1, AMRITSAR (' CIT(A)', FOR SHORT) DATED 30.06.2017, DISMISSING THE ASSESSEES APPEAL CONTES TING HIS ASSESSMENT U/S. 143(3) READ WITH SECTION 148 OF THE INCOME TAX ACT, 1961 ( 'THE ACT' HEREINAFTER) DATED 13.03.2013 FOR ASSESSMENT YEAR (AY) 2007-08. 2. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSE SSEE-INDIVIDUALS, IN THE BUSINESS OF MANUFACTURING & TRADING OF ELECTRIC TRA NSFORMERS/ACSR/ACC, ETC. INCOME FOR THE RELEVANT YEAR WAS ASSESSED U/S. 143( 3) AT RS.14,29,271 VIDE ORDER DATED 18.12.2009. THIS WAS DONE BY APPLYING A NET P ROFIT RATE OF 5% ON THE ITA NO. 556 (ASR)/2017(AY 2007-08) WASEEM AHMAD KHATEEB V. ITO 2 ASSESSEES TURNOVER, RECKONED AT RS.285.85 LACS, I. E., AS AGAINST THE DISCLOSED TURNOVER OF RS.226.61 LACS. THE ASSESSEES BANK ACC OUNT WAS FOUND TO BEAR CREDITS DURING THE RELEVANT YEAR AT RS.321.95 LACS, SO THAT HE WAS CALLED UPON IN THE ASSESSMENT PROCEEDINGS TO EXPLAIN THE DIFFERENCE, A ND WHICH HE DID FOR RS.36.10 LACS, BEING TRANSFER ENTRIES FROM THE ACCOUNT OF HI S FATHER (RS.26.10 LACS) AND REVERSAL ENTRIES (FOR RS.10 LACS). THE BALANCE UNEX PLAINED CREDIT OF RS.59.24 LACS WAS REGARDED BY THE ASSESSING OFFICER (AO) AS ON AC COUNT OF SALES, AND A PROFIT RATE OF 5% APPLIED ON THE TOTAL SALE THUS, I.E., RS .285.85 LACS. THE ASSESSMENT WAS SUBSEQUENTLY REOPENED U/S. 148 IN-AS-MUCH AS, AS IT APPEARS, THERE WAS NO BASIS WITH THE AO TO TREAT THE UNEXPLAINED CREDIT AS PART OF SALES. THE ASSESSEE IN THE REASSESSMENT PROCEEDINGS FURNISHED A RECONCILIATION , I.E., BETWEEN THE DISCLOSED FIGURE OF TURNOVER (AT RS.226.61 LACS) AND THE AGGR EGATE CREDIT IN THE BANK (ACCOUNT AT RS.321.95 LACS). THE SAME INCLUDED RS.13,29,808 AS ADVANCE AGAINST SALES, OF WHICH RS.6.05 LACS WAS FOUND TO HAVE BEEN RECEIVED IN CASH. AS THE ASSESSEE COULD NOT FURNISH COMMUNICABLE ADDRESSES OF THE PERSONS/P ARTIES; BILLS OF SALES; MONEY RECEIPT, ETC., THE SAME COULD NOT BE ACCEPTED AS SA LES. FURTHER, WHY WOULD A PERSON PAY FOR PURCHASE IN CASH, I.E., IN EXCESS OF RS.20, 000. THE SAID AMOUNT WAS ACCORDINGLY ADDED AS INCOME FROM AN UNDISCLOSED SOU RCE U/S. 68. IN APPEAL, THE LD. CIT(A) CONFIRMED THE SAME, AS NO IMPROVEMENT IN HIS CASE COULD BE MADE BY THE ASSESSEE, HOLDING AS UNDER: A PERUSAL OF THE ASSESSMENT ORDER CLEARLY SHOWS TH AT THE AO HAS PASSED VERY REASONABLE ORDER AFTER RECONCILIATING ALL THE EXPLANATION GIVE N BY ASSESSEE AND GIVING DUE CREDIT OF PAYMENT RECEIVED THROUGH CHEQUES, ETC. THE ASSESSEE DID NOT PRODUCE ANY REASONABLE (G1) EXPLANATION IN RESPECT OF THIS ADDITION BEFORE AO. THE APPELLANT HAS NOT PRODUCED ANY SUBMISSION/ EVIDENCE IN SUPPORT OF HIS CLAIM EVEN D URING APPELLATE PROCEEDINGS EVEN AFTER SO MANY OPPORTUNITIES PROVIDED. IN VIEW OF THE ABOVE D ISCUSSIONS THE APPEAL OF THE ASSESSEE IS DISMISSED. ITA NO. 556 (ASR)/2017(AY 2007-08) WASEEM AHMAD KHATEEB V. ITO 3 AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL, RAISIN G THE FOLLOWING GROUNDS: 1. IN CONFIRMING 5% OF THE NET PROFIT RATE ON THE GROSS COLLECTION OF THE BANK ACCOUNT WITHOUT DEDUCTING TRANSFER & REVERSAL ENTRIES IN CO MPARISON OF THE NET PROFIT RATE OF 1.02% AS DECLARED BY THE ASSESSEE AND THE ADDITION OF RS.6,0 50,00.00 AS PER REASSESSMENT ORDER AS CASH ADVANCES. 2. THAT THE NOTICE WAS SERVED BY CIT(A) JAMMU AND O RDER WAS PASSED BY CIT(A) AMRITSAR AND NOTICE WAS RECEIVED BY THE ASSESSEE AF TER THE DATE OF HARING. 3. THAT THE WRITTEN SUBMISSION FILED BY THE ASSESSE E THROUGH SPEED POST WERE NOT CONSIDERED BY THE CIT APPEALS JAMMU. 4. THAT THE ASSESSEE WAS NOT GIVEN REASONABLE OPPOR TUNITY OF BEING HEARD. 3. BEFORE ME, THE ASSESSEE WAS NOT REPRESENTED EITH ER IN PERSON OR THROUGH AN AUTHORIZED REPRESENTATIVE (AR), PLACING RELIANCE ON HIS WRITTEN SUBMISSIONS DATED 28.12.2017 (COPY ON RECORD). THE LD. DEPARTMENTAL R EPRESENTATIVE (DR) WOULD RELY ON THE FINDINGS BY THE AO AND THE LD. CIT(A). 4. THE ASSESSEES CHALLENGE TO THE NET PROFIT RATE (OF 5% OF SALES) IS WITHOUT MERIT IN-AS-MUCH AS THE SAME DOES NOT ARISE EITHER OUT OF THE IMPUGNED ORDER OR THE IMPUGNED ASSESSMENT, BEING A SUBJECT MATTER OF ASSE SSMENT U/S. 143(3) DATED 18.12.2009. THE ASSESSEES GROUND WITH REGARD TO NO N EXTENSION OF REASONABLE OPPORTUNITY OF BEING HEARD BY THE FIRST APPELLATE A UTHORITY IS ALSO WITHOUT ANY SUPPORTING MATERIAL AND, IN FACT, EVEN WITHOUT ANY CONTENTION IN ITS RESPECT PER HIS WRITTEN SUBMISSIONS, WHICH REPRESENT THE ASSESSEES CASE ON MERITS. THERE IS NOTHING THEREIN TO CONTRADICT THE SPECIFIC FINDINGS BY THE AO AND, FURTHER, THAT BY THE LD. CIT(A). THERE IS ALSO NO REFERENCE THEREIN WITH REGARD TO THE RECEIPT OF THE NOTICE OF HEARING FROM THE FIRST APPELLATE AUTHORIT Y, MUCH LESS ANY PLACED/ADDUCED ON RECORD. NO DOUBT, THE WRITTEN SUBMISSIONS BEAR C ONTENTIONS QUA THE IMPUGNED ADDITION OF RS.6.05 LACS. EVEN THE SAME IS WITHOUT BASIS IN VIEW OF THE UNREBUTTED FINDINGS BY THE AO, WHICH REMAIN UNADDRESSED. IT HA S ALSO BEEN OBSERVED THAT CONSIDERING THE SAME AS SALES, WITHOUT ANY BASIS TH ERE-FOR, FORMS THE VERY BASIS FOR ITA NO. 556 (ASR)/2017(AY 2007-08) WASEEM AHMAD KHATEEB V. ITO 4 INITIATING THE REASSESSMENT PROCEEDINGS. THE INITIA TION OF THE REASSESSMENT PROCEEDINGS IS NOT UNDER CHALLENGE, NOR WAS IT BEFO RE THE LD. CIT(A). UNDER THE CIRCUMSTANCES, IN VIEW OF THE FIRM FINDI NGS BY THE AO AND THE LD. CIT(A), WHICH REMAIN UNREBUTTED, THERE IS NO BASIS FOR DISTURBING THEIR ADJUDICATION QUA THE IMPUGNED OF RS.6.05 LACS. IN FACT, THE SAID FI GURE STANDS ARRIVED AT AFTER CONSIDERING THE ASSESSEES EXPLANATION, WHICH THUS STANDS ACCEPTED IN PART. SO, HOWEVER, IN-AS-MUCH AS 5% OF THE IMPUGNED SUM OF RS .6.05 LACS STANDS ALREADY ASSESSED AS NET PROFIT ON SALES, ONLY THE BALANCE O F 95% THEREOF, I.E., RS.5,74,750, COULD HAVE BEEN FURTHER ADDED, I.E., UPON REGARDING THE SAME AS UNEXPLAINED CREDIT U/S. 68 AND NOT AS PART OF SALES. THE ASSESSEE GETS PART RELIEF TO THAT EXTENT, I.E., RS.30,250. I DECIDE ACCORDINGLY. 5. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON APRIL 12, 201 8 SD/- (SANJAY ARORA) ACCOUNTANT MEMBER DATE: 12.04.2018 /GP/SR. PS. COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: WASEEM AHMAD KHATEEB, PROP. OF BRIJESH INDUSTRIES, INDUSTRIAL ESTATE, SANAT NAGAR SRINAGAR K ASHMIR (2) THE RESPONDENT: I.T.O. WARD 3(3), SRINAGAR KASHMIR (3) THE CIT(APPEALS)-1, AMRITSAR (4) THE CIT CONCERNED (5) THE SR. DR, I.T.A.T TRUE COPY BY ORDER