Mukund Mohan Jadhav, Kolhapur V. Income tax Officer, Kolhapur

ITA 587/PUN/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2465 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 09-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 143(3); 147; 11

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , BEFORE MS. SUSHMA CHOWLA, JM . / ITA NO S . 586 & 587 /P U N/201 7 / ASSESSMENT YEAR S : 2010 - 11 & 2011 - 12 SHRI MUKUND MOHAN JADHAV, 1147, D WARD, GURUWARPETH, KOLHAPUR 416004 . / APPELLANT PAN: A GOPJ9385M VS. THE INCOME TAX OFFICER, WARD 1 (1), KOLHAPUR . / RESPONDENT / APPELLANT BY : S HRI M.K. KULKARNI / RESPONDENT BY : S HRI YOGESH KAMAT / DATE OF HEARING : 1 3 . 0 8 .201 8 / DATE OF PRONOUNCEMENT: 28 . 0 8 .201 8 / ORDER PER SUSHMA CHOWLA, J M : BOTH T H E APPEAL S FILED BY ASSESSEE ARE AGAINST CONSOLIDATED ORDER OF CIT (A) - 2, KOLHAPUR , DATED 15.12.2016 RELATING TO ASSESSMENT YEAR S 201 0 - 1 1 AND 20 1 1 - 12 AGAINST RESPECTIVE ORDER S PASSED UNDER SECTION 147 R.W.S. 144 OF THE INCOME - TAX ACT , 1961 (IN SHORT THE AC T) . 2. BOTH THE APPEALS OF SAME ASSESSEE ON SIMILAR ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF ITA NO S . 586 & 587 /P U N/201 7 SHRI MUKUND MOHAN JADHAV 2 CONVENIENCE. HOWEVER, IN ORDER TO ADJUDICATE THE ISSUE, REFERENCE IS BEING MADE TO THE FACTS IN ITA NO. 586 /PUN/201 7 , RELATING TO ASSESSMENT YEAR 201 0 - 1 1 . 3. THE ASSESSEE IN ITA NO. 586 /PUN/201 7 , RELATING TO ASSESSMENT YEAR 201 0 - 11 HAS RAISED THE FOLLOWING GROUND S OF APPEAL: - 1 . THE COMMISSIONER OF INCOME TAX, (APPEALS) - 2, KOLHAPUR (HEREIN AFTER REFERRED TO AS THE CIT(A) ERRED IN SUSTAINING THE ADDITION TO THE EXTENT OF RS.18,59,454/ - BEING THE ESTIMATED GROSS PROFIT @ 8.76% ON THE CASH DEPOSITS OF RS.2,12,26,647/ - IN THE THREE SAVING ACCOUNTS OF THE APPELLANT. THE APPELLANT SUBMITS AS UNDER, WITHOUT PREJUDI CE TO EACH OTHER: A . THE APPELLANT HAVING FILED HIS RETURN OF INCOME DECLARING INCOME UNDER SECTION 44AF THE CIT(A) OUGHT TO HAVE ACCEPTED THE EXPLANATION OF THE APPELLANT THAT THE TURNOVER AS DISCLOSED IN THE RETURN OF INCOME IS APPROPRIATE AND IT IS INCORR ECT TO ESTIMATE THE TURNOVER ON THE BASIS OF THE TRANSACTIONS IN THE BANK ACCOUNT. B . WITHOUT PREJUDICE TO THE ABOVE THE GROSS PROFIT RATIO ESTIMATED @ 8.76% IS VERY MUCH ON THE HIGHER SIDE AND IS UNHEARD OF IN THE LINE OF GOLD - JEWELLERY DEALING, IT BEING VE RY HIGH VALUE COMMODITY. THE PERCENTAGE ADOPTED BY THE CIT(A) IS THUS INCORRECT. 4. IN BOTH THE YEARS UNDER APPEAL, THE ASSESSEE IS AGGRIEVED BY THE ADDITION MADE BY ESTIMATING GROSS PROFIT @ 8.76% ON CASH DEPOSITS IN THREE SAVINGS BANK ACCOUNTS OF ASSES SEE TOTALING 2,12,26,647/ - . THE ASSESSEE HAS FIRST OBJECTED TO THE ESTIMATION OF TURNOVER AND ON WITHOUT PREJUDICE BASIS HAS AGITATED ESTIMATION OF GROSS PROFIT RATIO @ 8.76% BEING ON HIGHER SIDE. 5. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE WAS AN INDIVIDUAL AND WAS ENGAGED IN GOLDSMITH BUSINESS ON MAJURI (LABOUR) BASIS UNDER THE NAME AND STYLE YESH JEWELLERS AT KOLHAPUR. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD SHOWN TURNOVER OF 35,79,450/ - , ON WHICH IT HAD DECLARED NET PROFIT AT 3,13,637/ - . THE ASSESSEE HAD FURNISHED THE RETURN OF INCOME DECLARING TOTAL INCOME OF 2,73,640/ - . DURING INVESTIGATION, THE INVESTIGATION ITA NO S . 586 & 587 /P U N/201 7 SHRI MUKUND MOHAN JADHAV 3 WING FOUND THAT THERE WERE CASH DEPOSITS AND WITHDRAWALS IN THREE DIFFERENT BANK ACCOUNTS MAINTAINED BY THE ASSESSEE. THE ST ATEMENT OF ASSESSEE WAS RECORDED BY THE DDIT(INV), KOLHAPUR ON 22.01.2013. AT THE TIME OF RECORDING THE STATEMENT, THE ASSESSEE WAS ASKED TO EXPLAIN DEPOSITS AND WITHDRAWALS OF CASH IN DIFFERENT BANK ACCOUNTS. THE ASSESSEE EXPLAINED THAT HE WAS ENGAGED I N SUCH NATURE OF BUSINESS AND POINTED OUT THAT THE DEPOSITS WERE OUT OF AMOUNTS COLLECTED BY SELLING GOLD BIDS DOOR - TO - DOOR IN GORAKHPUR & RAIBARELI AND THEN AFTER ARRIVING AT KOLHAPUR, THE AMOUNTS WERE WITHDRAWN IN CASH. THE ASSESSING OFFICER RECEIVED IN FORMATION ABOUT CASH DEPOSITS IN THREE BANK ACCOUNTS MAINTAINED BY THE ASSESSEE TOTALING ABOUT 2.48 CRORES IN FINANCIAL YEAR 2009 - 10 AND ABOUT 2.30 CRORES IN FINANCIAL YEAR 2010 - 11. AFTER GOING THROUGH THE INFORMATION AND STATEMENT RECORDED, THE CONCL USION WAS THAT CASH DEPOSITS AND WITHDRAWALS IN THE BANK ACCOUNTS CONSTITUTE TURNOVER OF ASSESSEES GOLDSMITH BUSINESS. THE ASSESSING OFFICER NOTED THAT ASSESSMENT FOR ASSESSMENT YEAR 2009 - 10 WAS COMPLETED UNDER SECTION 143(3) OF THE ACT. THE ASSESSEE HA D FILED RETURN OF INCOME DECLARING INCOME OF 1,59,730/ - . HOWEVER, THE ASSESSING OFFICER ADOPTED GROSS PROFIT OF ASSESSEE @ 10.15% OF TURNOVER AND THE INCOME FROM BUSINESS WAS ESTIMATED AT 3,90,775/ - . THE ASSESSING OFFICER WHILE COMPLETING ASSESSMENT FOR THE INSTANT ASSESSMENT YEAR I.E. ASSESSME NT YEAR 2010 - 11 ADOPTED THE ASSESSEES TURNOVER ON THE BASIS OF CASH DEPOSITS IN THE BANK ACCOUNTS TOTALING ABOUT 2.48 CRORES AND THE PROFIT @ 10.15% ON THIS TURNOVER WAS WORKED OUT AT 26,66,655/ - , WHICH WAS ADDED AS INCOME OF THE ASSESSEE. 6. IN APPE AL, FIRST OBJECTION RAISED BY THE ASSESSEE WAS THAT THE ASSESSING OFFICER HAD NOT CONSIDERED THE TURNOVER ALREADY DECLARED BY THE ASSESSEE AND SECOND OBJECTION WAS THE GP RATE APPLIED FOR ESTIMATION OF PROFIT BEING VERY ITA NO S . 586 & 587 /P U N/201 7 SHRI MUKUND MOHAN JADHAV 4 HIGH. THE CIT(A) NOTED THE CLAIM OF ASSESSEE THAT ON TURNOVER OF 35,79,450/ - , HE HAD DECLARED PROFITS UNDER SECTION 44AF OF THE ACT. HOWEVER, THE SAID AVERMENT OF THE ASSESSEE WAS FOUND TO BE NOT CORRECT AS UNDER SECTION 44AF OF THE ACT IT WAS PROVIDED THAT 5% OF THE TOTAL TURNOVER, IN CASE OF TURNOVER BELOW 40 LA KHS WAS PRESUMED TO BE THE INCOME OF THE ASSESSEE. HOWEVER, THE ASSESSEE HAD DECLARED HIGHER RATE OF GP RATE WHICH WORKED OUT TO 8.76% OF THE TURNOVER. THE CIT(A) FIRST HELD THAT THE TURNOVER BE ADOPTED AFTER EXCLUDING THE TURNOVER ALREADY DECLARED BY TH E ASSESSEE IN THE RETURN OF INCOME AND WITH REGARD TO GP RATE, HE DIRECTED THAT THE SAME BE ADOPTED AT 8.76% OF THE TURNOVER. 7. THE ASSESSEE IS IN APPEAL AGAINST THE SAME. 8. THE FIRST ISSUE RAISED BY THE ASSESSEE OF ADOPTION OF TURNOVER WAS STRONGLY OBJECTED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE. HOWEVER, THERE IS NO MERIT IN THE STAND OF ASSESSEE IN THIS REGARD, WHERE THE TURNOVER HAS BEEN CALCULATED ON THE BASIS OF CASH DEPOSITS IN THE BANK ACCOUNTS MAINTAINED BY THE ASSESSEE. THE ASSESSEE HAD CONFIRMED THAT THE DEPOSITS IN THE SAID BANK ACCOUNTS WERE FROM HIS GOLDSMITH BUSINESS. FURTHER, THE ASSESSEE HAS FAILED TO EXPLAIN THE NATURE OF CASH DEPOSITS IN THE BANK ACCOUNTS. IN THE ABSENCE OF THE SAME, I UPHOLD THE ORDER OF CIT(A ) IN ADOPTING THE TURNOVER AT THE FIGURE OF ABOUT 2.12 CRORES. 9. NOW, COMING TO THE GP RATE APPLIED. THE PLEA OF ASSESSEE IS THAT GP RATE APPLIED IS HIGHER, WHEREIN THE ASSESSING OFFICER HAD APPLIED GP RATE OF 10.5% AND THE CIT(A) HAS REDUCED THE SAME TO 8.76%. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, THE ASSESSING OFFICER IS DIRECTED TO APPLY ITA NO S . 586 & 587 /P U N/201 7 SHRI MUKUND MOHAN JADHAV 5 THE RATE OF 7% TO WORK OUT THE ADDITIONAL INCOME IN THE HANDS OF ASSESSEE. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, PARTLY ALLO WED. 10. THE FACTS AND ISSUES IN ITA NO. 587 /PUN/201 7 ARE IDENTICAL TO THE FACTS AND ISSUES IN ITA NO. 586 /PUN/201 7 AND THE DECISION IN ITA NO. 586 /PUN/201 7 SHALL APPLY MUTATIS MUTANDIS TO ITA NO. 587 /PUN/201 7 . 1 1 . IN THE RESULT, BOTH THE APPEALS OF ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 28 TH DAY OF AUGUST , 201 8 . SD/ - (SUSHMA CHOWLA) / JUDICIAL MEMBER / PUNE ; DATED : 28 TH AUGUST , 201 8 . GCVS R / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 2 , KOLHAPUR ; 4. THE PR. CIT - 2, KOLHAPUR ; 5. 6. , , , - / DR SMC , ITAT, PUNE; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE