ITO, NEW DELHI V. SHRI DILIP KOCHAR, Nagpur

ITA 5752/DEL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84687 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 09-11-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Additional evidence
• Section: 68

Judgement Text

1 DILIP KOCHAR ITA NO. 5752/DEL/2012 NAGPUR IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR . , , ! , ' BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIVEK VARMA, JM ITA NO. 5752/DEL/2012 (ASSESSMENT YEAR : 2008-09) INCOME TAX OFFICERWARD 36(3), H BLOCK, VIKAS BHAWAN, NEW DELHI -110 002 #$ / VS. DILIP KOCHAR, 314, KRISHNA COMPLEX, BHANDARA ROAD, KAPSI (KHURD), DIST. NAGPUR, MAHARASHTRA % % % % ./ PAN :AGCPK 6803 H ( %& / APPELLANT) : ( '(%& / RESPONDENT) %& ) * / APPELLANT BY : SHRI P R MANE '(%& ) * / RESPONDENT BY : SHRI K K THAKKAR $ + ) , / DATE OF HEARING : 10.09.2014 -./ ) , /DATE OF PRONOUNCEMENT : 19.11.2014 0 0 0 0 O R D E R ! , . ./ PER VIVEK VARMA, JM: INSTANT APPEAL IS FILED BY THE DEPARTMENT AGAINST T HE ORDER OF CIT(A)XXX, DELHI. THEREAFTER, AT THE REQUEST BY TH E ASSESSEE, THE APPEAL HAS BEEN TRANSFERRED TO ITAT, NAGPUR BENCH, NAGPUR. 2. THE DEPARTMENT HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SES, THE LD. CIT(A) HAD ERRED IN REDUCING THE ADDITION OF RS. 2,1 8,675/- MADE BY THE AO TO RS. 10,974/- ON ACCOUNT OF DIFFERENCE IN CONTRACTUAL RECEIPTS AS PER 26AS AND AS DECLARED IN THE RETURN. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAD ERRED IN REDUCING THE ADDITION OF UNEXPL AINED CASH DEPOSIT TO RS. 3,01,504/- U/S 68 OF THE INCOME TAX A CT AS AGAINST RS. 26,36,000/- MADE BY THE AO. THE LD. CIT(A ) ADMITTED ADDITIONAL EVIDENCE WITHOUT FOLLOWING THE DECISION OF THE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF CIT V MANISH BUILDWELL PVT LTD. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE APPELLANT CRAVES LEAVE TO ADD, ALLOW OR AMEND ANY O R ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HE ARING OF THE APPEAL. 2 DILIP KOCHAR ITA NO. 5752/DEL/2012 3. ON THE BASIS OF AIR INFORMATION, THE AO MADE THE FOLLOWING ADDITIONS, AS NO SATISFACTORY RESPONSE WAS RECEIVED , WITH REGARD TO THE FOLLOWING DEPOSITS MADE IN CASH IN HIS SAVINGS BANK ACCOUNT. RS. 2,18,675/- ON ACCOUNT OF CONTRACT RECEIPTS RS. 26,36,000/- ON ACCOUNT OF UNEXPLAINED CREDITS I N THE BANK ACCOUNT. 4. ON BOTH THE ISSUES, THE DR VEHEMENTLY ARGUED THE CASE OF THE AO. ON THE OTHER HAND THE AR TOOK UP THE ISSUES AND SUBMITTED HIS ARGUMENTS INDEPENDENTLY. 5. THE AR SUBMITTED THAT IN SO FAR AS THE ADDITION MADE AT RS. 2.18 LACS, IT WAS ALLEGED BY THE AO THAT THE SAME WERE R ECEIPTS FROM SHREE SAI ROAD TRADING. THE ASSESSEE DENIED ANY RECEIPTS FROM SUCH PARTY. IT WAS ALSO CONTENDED THAT EVEN IN FORM NO. 26AS, NO S UCH RECEIPTS ARE SHOWN. 5. THE ASSESSEE SUBMITTED BEFORE THE REVENUE AUTHOR ITIES THAT EVEN ON ASSUMPTION THAT THE INFORMATION WAS CORRECT, AND THESE ARE CONTRACTUAL RECEIPTS, THEN BASED ON HISTORIC GROSS PROFIT RATE, MEAN OF THE SAME MAY BE APPLIED, WHICH COMES AT 1.39%. IN S UCH A SITUATION, THE ADDITION, THOUGH BEING CHALLENGED, AS WRONGLY M ADE, WOULD BE RS. 3,040/- ONLY (PAGE 3 OF THE CIT(A) ORDER). 6. WITH REGARD TO ADDITION OF RS. 26,36,000/-, THE ASSESSEE SUBMITTED THAT THESE WERE THE DEPOSITS MADE IN CASH BY HIS CUSTOMERS, THEREFORE, NO ADDITION COULD BE MADE ON ACCOUNT OF SECTION 68, BECAUSE, THE REVENUE HAS TO COME TO A CONCLUSION THAT THE MO NEY ACTUALLY BELONGS TO THE ASSESSEE, IF THE THREE CONDITIONS AS LAID OUT IN SECTION 68 ARE NOT FULFILLED. 7. THE ASSESSEE, IN THE ALTERNATE, SUBMITTED, THAT SINCE THERE WERE REGULAR DEPOSITS & WITHDRAWALS, THE DEPARTMENT SHOU LD HAVE TAKEN THE PEAK, AND, AT THE MOST, PEAK ADDITION COULD ONLY BE MADE. THE ASSESSEE 3 DILIP KOCHAR ITA NO. 5752/DEL/2012 MADE REFERENCE OF A NUMBER OF DECISIONS, WHICH FIND PLACE IN THE ORDER OF THE CIT(A), WHICH WE TOO, TOOK INTO CONSIDERATIO N. 8. THE CIT(A), AFTER DUE CONSIDERATION, CLOSED THE FIRST ISSUE BY TAKING 5% GROSS PROFIT AS REASONABLE DISALLOWANCE. 9. WE HAVE HEARD BOTH THE PARTIES AND WE ARE OF THE VIEW, IN SO FAR AS ADOPTION OF 5% GROSS PROFIT, AGAINST MEAN OF HIS TORIC GROSS PROFIT AS SUGGESTED BY THE ASSESSEE AT 1.39%, WOULD MAKE THE GROSS PROFIT IN THE BUSINESS GO HAYWIRE. WE, THEREFORE, HOLD, THAT TO A RRIVE AT A REASONABLE FIGURE, THE GROSS PROFIT AT 2.78% SHALL BRING A QUI ETUS TO THE DISPUTE. 12. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A ) AND DIRECT THE AO TO FIRST ASCERTAIN, WHETHER AT ALL, THE ALLEGED CON TRACT RECEIPTS PERTAIN TO THE ASSESSEE. IF ON FACTS, THESE RECEIPTS ARE PROVE D TO BE BELONGING TO THE ASSESSEE, THEN, COMPUTE THE DISALLOWANCE OF GRO SS PROFIT AT 2.78% ON THESE RECEIPTS OF RS. 2,18,675/-, IF IN CASE THE RECEIPTS DO NOT PERTAIN TO THE ASSESSEE, THEN THE AO SHALL DELETE T HE ADDITION, AS SUCH. 13. GROUND NO. 1 IS THEREFORE PARTLY ALLOWED. 14. IN SO FAR AS ADDITION SUSTAINED BY THE CIT(A) A T RS. 3,01,504/- ON THE BASIS OF PEAK WORKING, INSTEAD OF RS. 26,36,000 /-, WE ARE OF THE VIEW THAT SINCE THERE WERE CONSISTENT DEPOSITS AND WITHDRAWALS, THE PEAK ADDITION WAS THE ONLY WORKABLE AND ACCEPTABLE ALTERNATIVE, IN PLACE OF MEAN OF GROSS PROFIT RATE, BECAUSE, IN THE INSTANT CASE, THERE IS NO INDICATION OF CONTRACTUAL RECEIPTS. THE ADDITION SUSTAINED BY THE CIT(A), IN OUR OPINION, IS A CORRECT METHOD AND WE SUSTAIN THE SAME. 15. GROUND NO. 2 IS THEREFORE REJECTED. 16. WE MUST OBSERVE THAT NO CREDENCE COULD BE GIVEN TO THE SUBMISSIONS MADE BY THE AR IN THE WRITTEN SUBMISSIO NS, WHICH HAVE BEEN MADE NOW BEFORE US, FOR THE FIRST TIME. THESE SUBMISSIONS WE REJECT. 4 DILIP KOCHAR ITA NO. 5752/DEL/2012 17. IN THE RESULT, THE APPEAL AS FILED BY THE DEPAR TMENT IS TREATED AS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19/11/2014 SD/- SD/- ( . ) ( ! ) ( D. KARUNAKARA RAO ) ( VIVEK VARMA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER NAGPUR; (MUMBAI) 1$ DATED 19/11/2014 . $ . ./ * CHAVAN , SR. PS 0 0 0 0 ) )) ) ', ', ', ', 2 /, 2 /, 2 /, 2 /, / COPY OF THE ORDER FORWARDED TO : 1. %& / THE APPELLANT 2. '(%& / THE RESPONDENT. 3. 3 ( ) -XXX(30), NEW DELHI/ NAGPUR CONCERNED ___________ / THE CIT(APPEALS)- XXX(30), NEW DELHI/ NAGPUR CONCERNED ___________ 4. 3 (CENTRAL), NAGPUR/ CIT , NEW DELHI/NAGPUR ______CONCERNED, NEW DELHI/ NAGPUR ____________CONC ERNED. 5. 6 7 ',$ , , NEW DELHI/ NAGPUR / DR, ITAT, NEW DELHI/NAGPUR 6. 7 ! 8 + / GUARD FILE. 0 $ 0 $ 0 $ 0 $ / BY ORDER, / / TRUE COPY / / SENIOR PRIVATE SECRETARY ITAT, MUMBAI CAMP: NAGPUR