PRAKASH MEHTA, THANE V. ITO WD 25(2)(2), MUMBAI

ITA 556/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3722 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 23-01-2014
• Court: TRIBUNAL
• Assessee Lawyers: NAMESH JAIN
• Keywords: Unexplained cash credit; Depreciation; Income from undisclosed sources
• Section: 44AD; 143(3); 2

Judgement Text

1 ITA 556/MUM/2014 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI BEFORE SHRI JOGINDER SINGH (JUDICIAL MEMBER) AND SHRI ASHWANI TANEJA (ACCOUNTNT MEMBER) I.T.A. NO.556/MUM/2013 (ASSESSMENT YEAR : 2009-10) SHRI HEMAL MEHTA L/H OF SHRI PRAKASH MEHTA SHOP NO.6, BLDG NO. D-14 YOGI NAGAR, EKSAR ROAD BORIVALI (W) THANE 400 091 VS ITO, WD.25 (2)(2) MUMBAI PAN : AAFFP0873K (APPELLANT) (RESPONDENT) APPELLANT BY SHRI NAMESH JAIN RESPONDENT BY SHRI MUKESH JAIN DATE OF HEARING : 27-04-2016 DATE OF PRONOUNCEMENT : 29-04-2016 O R D E R PER ASHWANI TNEJA, AM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD.COMMISSIONER OF INCOME-TAX(APPEALS)-19, MUMBAI [ HEREINAFTER CALLED CIT(A)] DATED 18-12-2013 PASSED AGAINST THE ASSES SMENT ORDER U/S 143(3) 2 ITA 556/MUM/2014 DATED 22-12-2011 FOR ASSESSMENT YEAR 2009-10 RAISIN G THE FOLLOWING GROUNDS OF APPEAL: 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE AUTHORITIES BELOW HAVE ERRED IN MAKING/CONFIRMING THE ADDITION OF A S UM OF RS. 16,93,000/- U/S 68 AS UNEXPLAINED CASH CREDIT AND THE REASONS ASSIGNED BY THEM WERE WHOLLY WRONG AND NOT IN ACCORDANCE WITH THE FACTS OF THE CASE, A ND ARE AGAINST THE PROVISIONS OF 1. T. ACT AND RULES MADE THEREUNDER. 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE AUTHORITIES BELOW HAVE ERRED ADDING/SUSTAINING A SUM OF RS. 18,879/~ FROM OUT OF THE RECEIPTS ON ACCOUNT OF BROKERAGE AND COMMISSION, AND THE REASON S ASSIGNED BY THEM WERE 'WHOLLY WRONG, NOT IN ACCORDANCE WITH THE FACTS OF THE CASE, AND ARE AGAINST THE PROVISIONS OF 1. T. ACT AND RULES MADE THEREUNDER: 3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE AUTHORITIES BELOW HAVE FURTHER ERRED IN ADDING/SUSTAINING A SUM OF RS . 21,879/- FROM OUT OF RECEIPTS ON ACCOUNT OF BROKERAGE AND COMMISSION AS DIFFERENC E IN AIR INFORMATION, AND THE REASONS ASSIGNED BY THEM WERE WHOLLY WRONG AND NOT IN ACCORDANCE WITH THE FACTS OF THE CASE, AND ARE AGAINST THE PROVISIONS O F 1. T. ACT AND RULES MADE THEREUNDER. 4) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE AUTHORITIES BELOW HAVE ERRED IN NOT ALLOWING THE CREDIT OF TDS AMOUNT ING TO RS. 18,879/- (RS. 3667+RS. 14446+RS.766/-) BEING THE TDS DEDUCTED BY THE PARTIES WHO PAID TO THE APPELLANT THE BROKERAGE AND COMMISSION AS AFORESAID , AND CREDIT OF WHICH IS AVAILABLE/REFLECTED IN FORM NO. 26AS AND THE CORRES PONDING INCOME THEREOF IS ALREADY' GROSSED UP BY THE AO WHEREAS THE NET RECEI PTS WERE ACCOUNTED FOR 'BY THE APPELLANT EARLIER. 5) THE AUTHORITIES BELOW HAVE FURTHER ERRED IN INIT IATING/SUSTAINING THE PENALTY PROCEEDINGS U/S 271(L)(C) OF THE INCOME TAX ACT, WH ICH WERE WHOLLY WRONG, IRRELEVANT, AND NOT IN ACCORDANCE WITH THE FACTS AN D CIRCUMSTANCES OF THE CASE. 6) THE AUTHORITIES BELOW HAVE FURTHER ERRED IN LEVY ING/SUSTAINING INTEREST U/S 234 A1B/C OF THE INCOME TAX ACT, WHICH WERE WHOLLY WRON G, IRRELEVANT,AND NOT IN ACCORDANCE WITH THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. GROUND 1: IN THIS GROUND THE ASSESSEE HAS AGITATED THE ACTIO N OF LOWER AUTHORITIES IN MAKING ADDITION OF AGGREGATE AMOUNT OF RS.16,93,000 ON ACCOUNT OF CASH DEPOSITED IN THE BANK ACCOUNT OF THE ASSESS EE. 3 ITA 556/MUM/2014 3. THE ASSESSING OFFICER HAD MADE THE ADDITION ON T HE GROUND THAT ASSESSEE HAD DEPOSITED CASH AMOUNT AGGREGATING TO RS.23,03, 000 IN HIS SAVINGS BANK ACCOUNT MAINTAINED WITH CANARA BANK DURING THE YEAR UNDER CONSIDERATION. WHEN ASSESSING OFFICER ENQUIRED ABOUT THE SOURCE O F THE CASH DEPOSIT, THE ASSESSEE SUBMITTED THE DETAILS OF SOURCE OF DEPOSIT S FROM FOLLOWING THREE SOURCES: I. AMOUNT WITHDRAWN FROM THE SAME ACCOUNT AND REDEPOSITED RS. 4,20,000/- II. CASH PROFIT EARNED DURING THE YEAR (RS.5,43,663 + RS,2,37,521) PROFIT + DEPRECIATION. RS. 7,93,000/- III. AMOUNT DEPOSITED OUT OF THE RECEIPTS FROM CIVIL CONSTRUCTION WORK RS.11,00,000/- THE ASSESSING OFFICER CONSIDERED THE SUBMISSIONS OF THE ASSESSEE, BUT PARTLY ACCEPTED THE SAME. HE GAVE BENEFIT OF AMOUNT WITHD RAWN FROM THE SAME ACCOUNT AND REDEPOSITED AGGREGATING TO RS.4,10,000. WITH REGARD TO CASH PROFIT EARNED DURING THE YEAR OF RS.7,93,000, THE ASSESSIN G OFFICER GAVE BENEFIT OF RS.2 LAKHS ONLY AND THE REMAINING AMOUNT OF RS. 5,9 3,000 WAS TREATED AS INCOME FROM UNDISCLOSED SOURCES. SIMILARLY WITH RE GARD TO AMOUNT DEPOSITED OUT OF RECEIPTS FROM CIVIL CONSTRUCTION WORK OF RS. 11 LAKHS, THE SAME WAS NOT ACCEPTED AT ALL BY THE ASSESSING OFFICER, AND THERE FORE, ADDITION OF RS. 11 LAKHS WAS ALSO MADE. THUS, AGGREGATE ADDITION OF RS.16, 93,000 I.E. (RS.5,93,000 + RS.11 LAKHS) WAS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 3. BEING AGGRIEVED, THE ASSESSEE FILED APPEAL BEFOR E LD. CIT(A) WHEREIN NO RELIEF WAS GIVEN AND ADDITION MADE BY THE ASSESSING OFFICER WAS CONFIRMED. 4 ITA 556/MUM/2014 4. DURING THE COURSE OF HEARING BEFORE US, THE LD.C OUNSEL OF THE ASSESSEE DREW OUR ATTENTION ON VARIOUS PAGES OF PAPER BOOK C ONTAINING COPY OF INCOME- TAX RETURN, PROFIT & LOSS ACCOUNT OF EARLIER YEARS AND SUBSEQUENT YEARS SHOWING THAT INCOME OF THE ASSESSEE WAS RETURNED UNDER PRES UMPTIVE SCHEME OF TAXATION U/S 44AD OFFERING TAX @8% OF THE GROSS REC EIPTS FROM THE BUSINESS AND THE SAME HAS BEEN CONSISTENTLY ACCEPTED BY THE ASSE SSING OFFICER. THE ASSESSEE SUBMITTED COPY OF FUND FLOW AND CASH FLOW STATEMENT SHOWING INFLOW AND OUTFLOW OF THE CASH. IT WAS SUBMITTED THAT NOT HING WRONG WAS FOUND BY THE LOWER AUTHORITIES IN THE DOCUMENTARY EVIDENCES PLACED BEFORE THEM. 5. PER CONTRA, HE LD.DR RELIED UPON THE ORDERS OF T HE LOWER AUTHORITIES. 6. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES AS WELL AS ORDERS OF THE LOWER AUTHORITIES. IT IS NOTED BY US THAT ASSESSEE HAS BEEN OFFERING ITS INCOME UNDER THE PRESUMPTIVE SCHEME OF TAXATION U/S 44AD AND THE SAME HAS BEEN ACCEPTED ALL ALONG. THE ASSESSME NT ORDER HAS BEEN PASSED FOR A.Y. 2011-2012 U/S 143(3). UNDER THESE CIRCUMS TANCES, THE ACCOUNTS SUBMITTED BY THE ASSESSEE SHOWING SOURCE OF DEPOSIT OF CASH FROM THE PROFIT OF ITS BUSINESS CANNOT BE SIMPLY BRUSHED ASIDE. IT IS NOTED THAT ASSESSEE HAS SHOWN GROSS RECEIPTS FROM CIVIL CONSTRUCTION WORKS FOR AN AMOUNT OF RS.11,01,250; THE SAME HAS BEEN ACCEPTED BY THE ASS ESSING OFFICER IN THE ASSESSMENT ORDER. THE LD.COUNSEL HAS RELIED UPON B EFORE US THE JUDGMENT OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS SURINDAR PAL ANAND 242 CTR 61 ( P&H) WHEREIN IT WAS HELD THAT WH ERE INCOME OF THE ASSESSEE HAS BEEN ASSESSED UNDER PRESUMPTIVE TAX @8 % OF THE GROSS RECEIPTS UNDER THE SPECIAL PROVISIONS OF SECTION 44AD, THEN, ASSESSEE WAS NOT UNDER OBLIGATION TO EXPLAIN INDIVIDUAL ENTRY OF CASH DEPO SIT TO THE EXTENT OF GROSS RECEIPTS OF THE ASSESSEES BUSINESS. THUS, IN OUR VIEW, THE ASSESSING OFFICER WAS 5 ITA 556/MUM/2014 NOT JUSTIFIED TO DENY THE BENEFIT OF SOURCE OF CASH DEPOSITED INTO THE BANK ACCOUNT TO THE EXTENT OF GROSS RECEIPTS OF THE CIVI L CONSTRUCTION BUSINESS. THEREFORE, WE DIRECT THE ASSESSING OFFICER TO DELET E THE ADDITION OF RS.11 LAKHS. FURTHER, WITH REGARD TO CASH PROFIT EARNED DURING T HE YEAR AGGREGATING TO RS.7,93,000 THE ASSESSING OFFICER HAS ALLOWED CREDI T TO THE EXTENT OF RS.2 LAKHS ONLY. IN OUR CONSIDERED VIEW, THE AMOUNT CONSIDERE D BY THE ASSESSING OFFICER IS WITHOUT ANY BASIS ESPECIALLY WHEN NO DEFECTS HAVE B EEN POINTED OUT BY THE ASSESSING OFFICER IN THE DETAILS FURNISHED BY THE A SSESSEE EXPLAINING THE INFLOW AND OUTFLOW OF THE CASH. UNDER THESE CIRCUMSTANCES , WE DIRECT THE ASSESSING OFFICER TO PROVIDE CREDIT FOR FULL AMOUNT OF RS.7,9 3,000. AS A RESULT, ADDITION OF AGGREGATE AMOUNT OF RS.16,93,000 IS DIRECTED TO BE DELETED. GROUND 1 IS ALLOWED. 7. GROUNDS 2, 3 & 4 : THE ASSESSEE HAS REQUESTED THAT THESE ISSUES NEED T O BE SENT BACK TO THE FILE OF THE ASSESSING OFFICER F OR PROPER VERIFICATION OF FACTS. THE LD.DR DID NOT RAISE ANY OBJECTION IN THIS REGAR D. THEREFORE, KEEPING IN VIEW ALL THE FACTS AND CIRCUMSTANCES OF THE CASE WE FIND IT APPROPRIATE TO SEND GROUNDS 2,3 & 4 BACK TO THE FILE OF THE ASSESSING O FFICER FOR FRESH ADJUDICATION AFTER GIVING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ASSESSEE SHALL CO-OPERATE WITH THE ASSESSING OFFICER FOR PRO VIDING REQUISITE DETAILS AND DOCUMENTARY EVIDENCES. THESE GROUNDS MAY BE TREATE D AS ALLOWED FOR STATISTICAL PURPOSE. 8. GROUNDS 5 & 6 WERE NOT PRESSED, THEREFORE, DISMI SSED. 9. AS A RESULT APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING. SD/- SD/- (JOGINDER SINGH) (ASHWANI TANEJA) JUDICIAL MEMBER ACCOUNTANT MEMBER 6 ITA 556/MUM/2014 MUMBAI , DT : APRIL, 2016 PK/- COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE , C BENCH (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, MUMBAI BENCHES