Appeal Details
Counselvise Citation
[2016] 131 COUNSELVISE.COM (IT) 5047 (ITAT-JAIPUR)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
1 year(s) 3 month(s) 23 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
26-09-2016
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
Not Allotted
Assessment Year
2006-2007
Appeal Filed On
02-06-2015
Judgement Text
VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH HKKXPUN] YS[KK LNL; DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 594/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2006-07 SHRI CHITTAR SINGH GURJAR 1, GUJARO KA BAS, JHALDA KI DANI GONER ROAD, JAIPUR CUKE VS. THE ITO WARD- 7 (2) JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AGWPG 3959 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY:SHRI SHRAWAN KUMAR GUPTA, ADVOCATE JKTLO DH VKSJ LS@ REVENUE BY:SHRI R.A. VERMA, ADDL.CIT - DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 19/09/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 26 /09/2016 VKNS'K@ ORDER PER BHAGCHAND, AM THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A)-III, JAIPUR DATED 29-03-2016 FOR THE ASSES SMENT YEAR 2006-07 RAISING THEREIN FOLLOWING GROUNDS OF APPEAL. 1.1. THE IMPUGNED ORDER U/S 144/147 DATED 18-03-2 014 IS BAD IN LAW AND ON FACTS OF THE CASE FOR WANT OF JUR ISDICTION, BARRED BY LIMITATION AND VARIOUS OTHER REASONS AND HENCE THE SAME MAY KINDLY BE QUASHED. 1.2 THE ACTION U/S 147 IS BAD IN LAW AND ON FACTS O F THE CASE, FOR WANT TO JURISDICTION AND VARIOUS OTHER RE ASONS AND HENCE THE SAME MAY KINDLY BE QUASHED. ITA NO. 594/JP/2016 SHRI CHITTER SINGH GURJAR VS. ITO WARD-, 7(2), JAIP UR . 2 2. RS. 22,19,000/- THE LD. CIT(A) HAS GROSSLY ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN SUSTAINI NG THE ADDITION OF RS. 22,19,000/- ON ACCOUNT OF CASH DEP OSITS IN THE BANK ACCOUNT WHICH WAS FROM THE BUSINESS RECEIP TS OR SALE PROCEEDS OF ASSESSEE'S BUSINESS OF BUILDING MA TERIAL SUPPLY. HENCE, THE ADDITION SO MADE AND SUSTAINED O R CONFIRMED BY THE LD. CIT(A) IS TOTALLY CONTRARY TO THE PROVISIONS OF LAW AND FACTS AND HENCE THE SAME MAY KINDLY BE DELETED IN FULLY. 3. THE AO ERRED IN LAW AS WELL AS ON THE FACTS OF T HE CASE IN CHARGING OF INTEREST U/S 234B, 234C & 234D AS CONSEQUENTIAL IN NATURE. THE APPELLANT TOTALLY DENI ES ITS LIABILITY OF CHARGING ANY SUCH INTEREST. HENCE, THE INTEREST SO CHARGED, BEING CONTRARY TO THE PROVISIONS OF LAW AN D FACTS, MAY KINDLY BE DELETED IN FULLY. 2.1 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE HAS NOT PRESSED THE GROUND NO. 1.1 AND 1.2. HENCE, THE SAM E ARE DISMISSED BEING NOT PRESSED. 3.1 THE GROUND NO. 3 OF THE ASSESSEE IS REGARDING C HARGING OF INTEREST U/S 234B, 234C AND 234D WHICH ARE MANDATORY AND CON SEQUENTIAL IN NATURE. 4.1 APROPOS GROUND NO. 2 OF THE ASSESSEE, THE AO OB SERVED THAT AS PER AIR INFORMATION AVAILABLE IN THIS CASE, THE ASSESSE E HAD MAINTAINED A SAVING BANK ACCOUNT WITH ING VYSYA BANK, JAIPUR FOR THE PERIOD UNDER CONSIDERATION. THE AO ON ANALYSIS OF THE BANK STATE MENT OF THIS ACCOUNT BEARING NO. 539110013937 OBTAINED FROM THE ING VYAS YA BANK OBSERVED THAT THERE WERE VARIOUS CASH DEPOSITS AMOU NTING TO ITA NO. 594/JP/2016 SHRI CHITTER SINGH GURJAR VS. ITO WARD-, 7(2), JAIP UR . 3 RS. 24,33,000/- BY THE ASSESSEE ON VARIOUS DATES AN D THIS CASH DEPOSIT WAS FOR THE PERIOD FROM 01-04-2005 TO 31-03-2006. THE A O FURTHER OBSERVED THAT THE ASSESSEE HAD NOT FILED HIS RETURN OF INCOM E. THE ASSESSEE FAILED TO PROVIDE THE EXPLANATION AS TO THE SOURCE OF CASH DE POSITS. HENCE THE AO TREATED ENTIRE DEPOSITS OF RS. 24,33,000/- IN ING VYSYA BANK, JAIPUR AS UNEXPLAINED SOURCES AND ADDED THE SAME TO THE T OTAL INCOME OF THE ASSESSEE UNDER HEAD INCOME FROM OTHER SOURCES. FURT HER THE AO ON PERUSAL OF THE BANK ACCOUNT OF THE ASSESSEE OBSERVE D THAT THE ASSESSEE EARNED INTEREST OF RS. 75/- WHICH HAS ALSO BEEN ASS ESSED AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE UNDER THE HEAD INCOME FROM OTHER SOURCES 4.2 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R BEFORE THE LD. CIT(A) HAD PARTLY ALLOWED THIS GROUND OF APPEAL OF THE ASSESSEE BY OBSERVING AS UNDER:- 5.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, FINDING OF THE AO AND SUBMISSION OF THE APPELLANT. DURING THE YEAR, ASSESSEE HAD CREDITED IN HIS BANK ACCOUNT OF DEPOSI TS OF RS. 24,33,075/- WHICH INCLUDED CASH DEPOSIT OF RS. 22,8 3,000/- AND DEPOSIT BY CHEQUE OF RS. 1,50,000/- RS. 75/- IS THE BANK ACCOUNT. ON BEING ASKED TO EXPLAIN THE SAME, THE ASSESSEE DI D NOT APPEAR NOR FILED RETURN OF INCOME BEFORE THE AO. SO ASSESS MENT WAS MADE U/S 144. BEFORE ME THE ASSESSEE SUBMITTED THAT HE IS ENGAGED IN BUSINESS OF BUILDING MATERIAL AND FILED A COMPUTATI ON OF INCOME DECLARING TOTAL INCOME OF RS. 1,05,756/- BY DECLARI NG 5 % PROFIT OF TOTAL TURNOVER OF RS. 23,05,000/- U/S 44 AF AND FU RTHER CLAIMED ITA NO. 594/JP/2016 SHRI CHITTER SINGH GURJAR VS. ITO WARD-, 7(2), JAIP UR . 4 DEDUCTION U/S 80C AND FIELD A CHALLAN OF PAYMENT OF RS. 150/- ON 10.02.2016. HOWEVER NO RETURN OF INCOME WAS FILED B EFORE AO OR ME. ONLY COMPUTATION WAS FILED. HE FURTHER FILED PU RCHASE / SALE / ACCOUNT AND CASH FLOW STATEMENT. THE AO IN REMAND R EPORT STATED THAT THE ASSESSEE CONTENTION CANNOT BE ACCEPTED IN ABSENCE OF PURCHASE & SALE BILLS. HE SAID THAT THE FACT OF BUS INESS OF BUILDING MATERIAL HAS NOT BEEN ESTABLISHED / PROVED. REGARDING THE COMPUTATION OF INCOME, THE ASSESSEE H AS NOT MADE A CLAIM IN RETURN THEREFORE, THIS CLAIM CANNOT BE ACCEPTED BECAUSE OF GOETZE INDIA , 248 ITR 232 (2006) (SC) W HEREIN THE BENEFIT CANNOT BE GIVEN. REGARDING THE CONTENTION OF THE ASSESSEE THAT CAS H WAS DEPOSITED FROM THE WITHDRAWALS MADE & THAT BENEFIT OF RECYCLING OF FUNDS BE GIVEN, IT IS SEEN THAT OUT OF TOTAL CASH D EPOSIT OF RS. 22,83,000/- CASH WITHDRAWAL WAS OF RS. 2,14,000/- O NLY. RS. 22,11,410/- WERE WITHDRAWAL THROUGH ACCOUNT PAYEE C HEQUE. THEREFORE AT THE MOST THE BENEFIT OF REDEPOSIT OF C ASH OF RS. 2,14,000/- COULD BE GIVEN TO ASSESSEE. SO THIS BENE FIT OF RS. 2,14,000/- IS BEING GIVEN TO THE ASSESSEE. FURTHER, A SUM OF 1,50,000/- WAS DEPOSITED THROUGH CHEQUE FOR WHICH NO CONFIRMATION WAS FILED EITHER IN ASSES SMENT / REMAND PROCEEDINGS. WITH REGARD TO THE REMAINING CASH DEPO SIT OF RS. 2069000/- (2283000 - 214000) IT WAS FURTHER CONTEND ED THAT THE SAME IS DEPOSITED OUT OF SALE PROCEEDS. HOWEVER THE SAME CANNOT BE ACCEPTED IN ABSENCE OF BILLS/VOUCHERS WHICH THE ASSESSEE FAILED TO FURNISHED EVEN DURING APPELLATE PROCEEDINGS. THE ASSESSEE GETS RELIEF OF RS. 2,14,000/- ONLY. 4.3 THE LD. AR OF THE FILED THE WRITTEN SUBMISSION PRAYING THEREIN TO DELETE THE ADDITION OF RS. 22,19,000/- SUSTAINED BY THE LD. CIT(A). THE CONTENTS OF THE WRITTEN SUBMISSION FILED BY THE ASS ESSEE ARE AS UNDER:- ITA NO. 594/JP/2016 SHRI CHITTER SINGH GURJAR VS. ITO WARD-, 7(2), JAIP UR . 5 1. CORRECT FACTS: FIRSTLY WE WANT TO BRING CORREC T FACTS ON RECORD, WHICH COULD NOT BE BROUGHT ON RECORD IN ASS ESSMENT PROCEEDINGS DUE TO EX-PARTY ASSESSMENT. THE ASSESSE E IS ILLITERATE PERSON, HE IS STUDIED ONLY 3 RD CLASS AND BELONGS A RURAL VILLAGE AND RESIDE IN SMALL DHANI AND BELONGS TO FARMER FAMILY. HE WAS DOING THE BUSINESS OR TRADING OF BUILDING MATERIAL SUPPLI ERS. HIS ENTIRE SALE WAS IN CASH HOWEVER PURCHASES WERE THROUGH THE ACCOUNT PAYEE CHEQUE. THE ASSESSEE USED TO DEPOSIT HIS ENTI RE SALE RECEIPTS RECEIVED IN CASH IN THE BANK ACCOUNT THEREAFTER HE HAS ISSUED THE CHEQUES TO THE CONCERNED PARTIES FROM WHOM HE USED TO MAKE PURCHASES. THERE WERE ALSO CASH WITHDRAWALS OF RS. 2,14,000/- ON SOME DATES WHICH HAS ALSO RE-DEPOSITED IN THE BANK ACCOUNT. ALL THESE FACTS ARE VERY WELL CLEAR OR PROVING FROM THE NARRATION OF BANK STATEMENTS ITSELF. HOWEVER THE LD. AO AND LD. CIT(A ) HAS TOTALLY IGNORED ALL THESE TRANSACTIONS DESPITE AVAILABLE IN THE BANK STATEMENT ITSELF. HENCE ALL THE TRANSACTION IN THE BANK ACCOUNTS WERE RELATED TO HIS BUSINESS. HENCE ALL THE DEPOSITS IN THE BANK ACCOUNT IS NOT THE INCOME OF THE ASSESSEE. ONLY DIFFERENCE OF SALE AND PURCHASE IS GROSS PROFIT OF THE ASSESSEE AND AFTER EXPENSES THE NET PROFIT IS THE INCOME OF THE ASSESSEE. 2. REMAND REPORT NOT CONSIDERED FULLY BY THE LD. CI T(A): WHEN THE ASSESSEE HAS FILED ALL THE DETAILS AND ACC OUNT BEFORE THE LD. CIT(A) AS AN ADDITIONAL EVIDENCE AND THE LD. CI T(A) HAS SEND THE SAME TO THE LD. AO FOR HIS COMMENTS. IN THE REM AND PROCEEDINGS THE A/R OF THE ASSESSEE APPEARED AND EX PLAINED FULL FACTS AND DETAILS. THEREAFTER THE LD. AO HAS SEND H IS REMAND REPORT DATED 25.02.2016(PB32). IN WHICH HE HAS ACCEPTED OU R CONTENTS. HE HAS STATED AT PARA 2 (PB32) THAT DETAILS AND REP LY FURNISHED BY THE ASSESSEE HAS BEEN EXAMINED, IN WHICH THE FACTS AND RETURN OR REPLY STATED BY THE ASSESSEE REVELS/SEEMS CORRECT. HOWEVER HE FURTHER STATED THAT THE ASSESSEE HAS NOT FILED BILL S AND VOUCHERS AND ASSESSEE IS NOT A REGULAR ASSESSEE. HENCE ADDITIONA L EVIDENCE SHOULD NOT BE ACCEPTED. IN THIS REGARD IT IS SUBMIT TED THAT THE AO HAS ACCEPTED THE CONTENTION OF THE ASSESSEE BUT HE HAS STATED FURTHER DUE TO NOT AVAILABLE BILLS AND VOUCHERS, THE SAME S HOULD NOT BE ITA NO. 594/JP/2016 SHRI CHITTER SINGH GURJAR VS. ITO WARD-, 7(2), JAIP UR . 6 ACCEPTED. THE ASSESSEE IS A RETAIL TRADER AND HE IS NOT REQUIRED TO KEEP BOOKS OF ACCOUNTS U/S 44AF. THE BUSINESS OF TH E ASSESSEE HAS BEEN PROVING FROM THE BANK STATEMENTS ITSELF. THERE IS NO ADVERSE IN THE REMAND REPORT OF THE LD. AO. WHO HAS ADMITTE DLY ACCEPTED THE FACTS OF THE CASE. THE LD. AO NOWHERE DENIED TH E FACTS OF THE CASE AND NOT REBUTTED THE DETAILS FILED BY THE ASSE SSEE RATHER HE ADMITTED THE SAME. WHEN THE PURCHASE WERE THROUGH C HEQUE. THAN THERE SHOULD NOT BE ANY QUESTION TO DENY THE SALE. THERE IS NO ADVERSE IN THE REMAND REPORT OF THE LD. AO. WHO HAS ADMITTEDLY ACCEPTED THE FACTS OF THE CASE. THE LD. AO NOWHERE DENIED THE FACTS OF THE CASE AND NOT REBUTTED THE DETAILS FILED BY T HE ASSESSEE RATHER HE ADMITTED THE SAME. THUS ON PERUSAL OF THE CIT(A) ORDER AND REMAND REPO RT IT IS CLEAR THAT THE ONLY REASON GIVEN BY THEM IS NOT AVA ILABILITY OF BILLS/VOUCHERS OF SALE AND PURCHASE. IN THIS REGARD IT IS SUBMITTED THAT BOTH THE PERSON HAS IGNORED THAT ALL MOST PURC HASE WERE THROUGH A/C PAYEE CHEQUE WHICH ITSELF THE BILLS AND VOUCHERS OF PURCHASE FOR THAT KINDLY PERUSED THE NARRATION OF B ANK STATEMENTS. AND WHEN THERE IS PURCHASE IS PROVED THAN THERE WER E ALSO BE SALE. HERE WE WOULD LIKE TO SUBMIT THAT WHILE DOING A JUD ICIOUS ACT BY A PERSON (HERE THE AO &CIT(A)) SHOULD ALSO KEEP IN MI ND THE CIRCUMSTANCE, FACTS, GENERAL APPROACH, STATUS ETC. . HE SHOULD NOT RESTRICT TO HIMSELF ONLY TO THE EVIDENCE WHERE THE SAME IS NOT POSSIBLE. HERE THE LD. CIT(A) HAS RESTRICTED TO HER SELF ONLY EVIDENCE OF BILLS AND VOUCHERS OF SALE AND PURCHASES AND IGN ORED THE CIRCUMSTANCE, FACTS, GENERAL APPROACH, STATUS AND O THER EVIDENCES ETC. KINDLY REFER THE DECISION OF MANGE RAM MITTAL V/S ACIT 105 TTJ 594(DEL)(SB) HENCE WE PRAY YOUR OWNER TO CONSID ER OUR CONTENTION IN THE INTEREST OF NATURAL JUSTICE AND D ELETE ENTIRE ADDITION. 3. TRANSACTION NOT CONSIDERED IN FULL: FURTHER IT I S SUBMITTED THAT THE LD. CIT(A) HAS NOT APPRECIATED THE TRUE AN D CORRECT FACTS REGARDING DEPOSITS IN SAVING BANK ACCOUNT, ALTHOUGH THE LD. AO HAS ACCEPTED THE SAME IN THE REMAND PROCEEDINGS AS STAT ED ABOVE. SHE HAS NOT CONSIDERED THE TRANSACTIONS RECORDED IN SB ACCOUNT ON DEBIT ITA NO. 594/JP/2016 SHRI CHITTER SINGH GURJAR VS. ITO WARD-, 7(2), JAIP UR . 7 SIDE. SHE HAS ONLY SEEN THE CREDIT SIDE. SHE HAS NO T READ THE NATURE OF TRANSACTION NOTED IN BANK A/C. THE LOWER AUTHORI TY HAS SIMPLY TOTALED THE TRANSACTIONS ON CREDIT SIDE IGNORING TH E TRANSACTIONS ON DEBIT SIDE AND MADE THE ADDITION TREATING ALL DEPOS ITS IN CREDIT SIDE AS UNEXPLAINED INCOME FROM UNDISCLOSED SOURCES OF T HE YEAR UNDER CONSIDERATION ON ASSUMPTIONS AND PRESUMPTIONS ONLY. WHICH IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE. WHEN FROM THE COPY OF BANK STATEMENT IT IS VERY CLEAR THAT THERE WERE CREDIT A S WELL AS DEBIT ENTRIES RELATED TO CASH DEPOSITED AND WITHDRAWN MOS TLY THROUGH CHEQUE RESPECTIVELY FROM SUCH BANK ACCOUNT. FOR EXAMPLE ASSESSEE MADE PAYMENT TO M/S BHARAT AGENCIES, FROM WHOM CEMENT PURCHASE, BAIRABH FRAMIN G CENTER, SANTOSH BUILDING MATERIAL SUPPLIERS, WHICH SHOWS NA TURE OF BUSINESS. VIDE COPY OF BANK STATEMENT OR BANK BOOK (PB1-9). IF WE TREAT IT AS NON BOOKS OF ACCOUNTS CASE THAN THE PROFIT ON THE TOTAL TURNOVER OF RS.23,05,000/- TAKING THE ENTIRE CASH D EPOSITS IN BANK ACCOUNT AND OTHER SALES IF ANY REMAINED THAN THE PR OFIT U/S 44AF COMES TO RS. 115250/- WHICH AT THE WORST MAY KINDLY BE TREATED INCOME OF THE ASSESSEE NOT THE ENTIRE SALE OF RS. 2 3,05,0000/-. HOWEVER THE LD. CIT(A) HAS FAILED TO COMPUTE THE CO RRECT POSITION IN THE BEST JUDGMENT APPELLATE PROCEEDINGS IN THIS RESPECT. IN THE PRESENT CASE THE LD. AO HAS NOT MENTIONED TH E SECTION UNDER WHICH HE HAS ASSESSED THE INCOME TREATING THE DEPOSITS AS UNEXPLAINED AND OUT OF UNDISCLOSED SOURCE OF INCOME . THE ARBITRARY ADDITION WAS MADE JUST ON ASSUMPTIONS AND PRESUMPTI ONS ONLY. THE OPINION OF THE ASSESSING OFFICER IS REQUIRED TO BE FORMED OBJECTIVELY WITH REFERENCE TO THE MATERIAL AVAILABL E ON RECORD. APPLICATION OF MIND IS THE SINE QUA NON FOR FORMING THE OPINION CIT V/S C. MOHANAKALA (2007) 291 ITR 278 (SC). 4. IN SUPPORT WE HAD FILED COPY OF CASH BOOK, BANK BOOK AND LEDGER ACCOUNT OF SALE PURCHASE AND OTHER WHICH HAS BEEN PREPARED ON THE BASIS OF BANK STATEMENT ITSELF. AND ALSO FIL ED COMPUTATION OF TOTAL INCOME SHOWING THE NET PROFIT OR INCOME OF TH E ASSESSEE FOR THE YEAR UNDER CONSIDERATION. ALL THESE DOCUMENT CL EARLY INDICATE OF THE RETAIL TRADING BUSINESS OR TRADING OF THE ASSES SEE. DESPITE THE SAME SHE HAS NOT CONSIDERED NOR REBUTTED THE SAME. ITA NO. 594/JP/2016 SHRI CHITTER SINGH GURJAR VS. ITO WARD-, 7(2), JAIP UR . 8 5. DIRECTLY COVERED MATTER: FURTHER THE ABOVE MATTE R IS ALSO DIRECTLY COVERED BY THE DECISION OF THIS OF THIS HO NBLE BENCH IN THE CASE OF ITO KISHANGARH V/S SH. PUSHPENDRA KUMAR JAI N IN ITA NO. 289/JP/2012 DT. 01.01.2016 55 TW 26(JP), WHERE IN THE HONBLE BENCH HAS FOLLOWED THE DECISION OF DECISION OF SMT. ANITA CHOUDHARY IN IAT NO. 733/JP/2009 DT. 07.05.2010, WH ICH HAS BEEN AFFIRMED BY THE HONBLE RAJ. HIGH COURT IN DBIT NO. 289/2010. IN THIS CASE THE HONBLE BENCH AND COURT HAS TREATED TH E CASH DEPOSIT IN THE BANK ACCOUNT OF THE ASSESSEE AS UNDISCLOSED TURNOVER OF THE APPELLANT AND DIRECTED TO APPLY THE GROSS PROFIT @1 0%. AND ALSO KINDLY REFER THE CASE OF ITO KISHANGARH V/S SH. PUS HPENDRA KUMAR JAIN IN ITA NO. 250/JP/2010 DT. 10.12.2010. A ND THE HONLBE BENCH HAS ALSO APPLIED THE SAME IN OTHER CAS ES. THUS IN THE PRESENT CASE 10% G.P RATE MAY BE APPLIE D AND AFTER THAT NET PROFIT OF 5% AS PER PROVISION OF SEC . 44AF APPLICABLE IN THIS YEAR MAY KINDLY BE APPLIED. 6.1 IN THE CASE OF CIT VS. SURINDER PAL ANAND 242 CTR 61(P&H) IT HAS BEEN HELD THAT PARA8. SEC. 44AD OF THE ACT WAS INSERTED BY FINANCE ACT, 1994 W.E.F. 1ST APRIL, 199 4. SUB-S. (1) OF S. 44AD CLEARLY PROVIDES THAT WHERE AN ASSESSEE IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION OR SUPPLY OF LABOUR FOR CIVIL CONSTRUCTION, INCOME SHALL BE ESTIMATED AT 8 PER CE NT OF THE GROSS RECEIPTS PAID OR PAYABLE TO THE ASSESSEE IN THE PRE VIOUS YEAR ON ACCOUNT OF SUCH BUSINESS OR A SUM HIGHER THAN THE A FORESAID SUM AS MAY BE DECLARED BY THE ASSESSEE IN HIS RETURN OF IN COME NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN SS. 28 TO 43C OF THE ACT. THIS INCOME IS TO BE DEEMED TO BE THE P ROFITS AND GAINS OF SAID BUSINESS CHARGEABLE OF TAX UNDER THE HEAD ' PROFITS AND GAINS OF BUSINESS'. HOWEVER, THE SAID PROVISIONS ARE APPL ICABLE WHERE THE GROSS RECEIPTS PAID OR PAYABLE DO NOT EXCEED RS. 40 LACS. PARA 7 .ONCE UNDER THE SPECIAL PROVISION, EXEMPTION FROM MAINTAINING OF BOOKS OF ACCOUNT HAS BEEN PROVIDED A ND PRESUMPTIVE TAX @ 8 PER CENT OF THE GROSS RECEIPTS ITSELF IS THE BASIS FOR DETERMINING THE TAXABLE INCOME, THE ASSESSEE WA S NOT UNDER OBLIGATION TO EXPLAIN INDIVIDUAL ENTRY OF CASH DEPO SIT IN THE BANK UNLESS SUCH ENTRY HAD NO NEXUS WITH THE GROSS RECEI PTS. THE STAND ITA NO. 594/JP/2016 SHRI CHITTER SINGH GURJAR VS. ITO WARD-, 7(2), JAIP UR . 9 OF THE ASSESSEE BEFORE CIT(A) AND THE TRIBUNAL THAT THE SAID AMOUNT OF RS. 14,95,300 WAS ON ACCOUNT OF BUSINESS RECEIPTS HAD BEEN ACCEPTED. LEARNED COUNSEL FOR THE APPELLANT WI TH REFERENCE TO ANY MATERIAL ON RECORD, COULD NOT SHOW THAT THE CAS H DEPOSITS AMOUNTING TO RS. 14,95,300 WERE UNEXPLAINED OR UNDI SCLOSED INCOME OF THE ASSESSEE. HERE IS THE SAME POSITION. 6.2 IN THE CASE OF CIT V/S PRADEEP SHANTI LAL PATEL 221 TAXMAN 436(GUJ) IT HAS BEEN HELD THAT LEARNED CIT(A ) HAD RESTRICTED ADDITION TO EXTENT OF RS.1.80 LACS BY WA Y OF BUSINESS INCOME FROM RETAIL TRADE OF ASSESSEE. IT HAD HELD T HAT CONSIDERABLE FORCE IN CONTENTIONS RAISED BY AO THAT TRANSACTIONS RECORDED IN BANK A/C NO. 2831 WITH AMARNATH CO-OP BANK LTD. DO NOT PERTAIN TO HIS HUF. ALL THESE FACTS CLEARLY ESTABLISH THAT CLAIM OF BUSINESS OF HUF WAS AN AFTERTHOUGHT AND IT WAS RIGHTLY REJEC TED BY AO. THEREFORE IN PRESENT CASE CONTENTION OF APPELLANT T HAT TRANSACTIONS IN THIS BANK A/C PERTAIN TO HIS BUSINE SS DESERVES TO BE ACCEPTED BUT STILL THERE WOULD BE A QUESTION OF DET ERMINING INCOME IN RESPECT OF THESE TRANSACTIONS. THERE IS NO EVIDE NCE ON RECORD EXCEPT THE STATEMENT OF THE APPELLANT WITH REGARD T O THE NATURE OF BUSINESS CARRIED ON BY HIM AND THE DETAILS RELATING TO THE COMPUTATION OF INCOME. THE APPELLANT HAS FILED RETU RN OF INCOME ON 13.08.2009 DECLARING INCOME OF RS.1,76,660/- U/S 44AF IN RESPECT OF THE TRANSACTIONS APPEARING IN THIS BANK A/C. IN VIEW OF SUCH STATEMENT MADE BY THE APPELLANT IN HIS RETURN OF IN COME UNDER DUE VERIFICATION AND THERE BEING NO OTHER EVIDENCE TO D ISBELIEVE IT, I AM INCLINED TO ACCEPT AS THE TRANSACTION RELATING TO R ETAIL TRADE. BUT THE DOCUMENTS RELATING TO THIS BUSINESS SUCH AS SALES P URCHASE INVOICES, BOOKS ETC. NEITHER MAINTAINED NOR PRODUCE D BY THE APPELLANT, THE BOOK RESULT DECLARED BY THE APPELLAN T CANNOT BE ACCEPTED EVEN THE MOST OF THE CREDITS (SALES) ARE M ATCHING WITH THE DEBITS (PURCHASES) WHICH SHOWS THAT THE APPELLANT H AS NOT DEPOSITED ENTIRE SALE PROCEEDS IN THIS BANK A/C. TH EREFORE I HAVE NO ALTERNATIVE BUT TO ESTIMATE INCOME BY ESTIMATING TH E SALES. THE TOTAL TURNOVER OF THE APPELLANT IN THIS BUSINESS IS ESTIM ATED AT RS.36 LACS AND THE NET INCOME U/S 44AF WOULD WORK OUT TO RS.1.80 LACS. ACCORDINGLY THE ADDITION OF RS.35,33,414/- IN RESPE CT OF CASH DEPOSITED IN THE BANK A/C AS UNDISCLOSED INCOME IS HEREBY ITA NO. 594/JP/2016 SHRI CHITTER SINGH GURJAR VS. ITO WARD-, 7(2), JAIP UR . 10 RESTRICTED TO RS.1.80 LACS BUT BY WAY OF BUSINESS I NCOME FROM RETAIL TRADE OF THE APPELLANT. AFORESAID FINDING HAS BEEN CONFIRMED BY THE LEARNED ITAT BY PASSING THE IMPUGNED JUDGMENT A ND ORDER AND THE ORDER PASSED BY THE LEARNED CIT(A) RESTRICTING THE ADDITION FROM RS.35,33,414/- TO RS.1.80 LACS HAS BEEN CONFIR MED BY LEARNED ITAT. WE ARE IN COMPLETE AGREEMENT WITH VIEW TAKEN BY E LEARNED CIT(A) AS WELL AS LEARNED ITAT. LD. CIT(A) AS WELL AS LEARNED ITAT HAD RIGHTLY HELD THAT ENTIRE AMOUNT CANNOT BE ADDED IN INCOME OF ASSESSEE AS UNDISCLOSED INCOME 6.3 IN THE CASE OF CIT V/S RANJEET KUMAR SETHIA 198 CTR 550 (RAJ.) HELD 3. SO FAR AS THE FIRST QUESTION IS CONCERNED, THE TRIBUNAL FOUND THE FACT THAT PEAK CREDIT OF THE BAN K ACCOUNT CANNOT BE TREATED AS UNEXPLAINED INCOME OF THE ASSESSEE. H OWEVER, WHILE DELETING THE ADDITIONS MADE AS UNEXPLAINED CASH CRE DIT, THE TRIBUNAL RESTORED THE ISSUE FOR ALL THE FOUR YEARS TO THE FILE OF THE AO WITH THE DIRECTION TO GIVE A FRESH FINDING IN TH E LIGHT OF TRIBUNALS OBSERVATIONS. THE PEAK CREDIT OF THE BAN K ACCOUNT CANNOT BE HELD TO BE UNDISCLOSED INCOME OF THE ASSE SSEE. OBVIOUSLY, THE BANKING TRANSACTION IN REGULAR COURS E OF BUSINESS CANNOT BE CONSIDERED AS CASH CREDIT SO AS TO INVOKE S. 68 OF THE ACT AND SO FAR AS WHETHER THE FINDING THAT BANK TRANSAC TION REPRESENTS UNDISCLOSED INCOME OF THE ASSESSEE, IT IS OPEN TO B E INQUIRED AS HAS RIGHTLY BEEN DONE BY THE TRIBUNAL, THEREFORE, THIS DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. 4. SO FAR AS THE SECOND ISSUE IS CONCERNED, S. 44AF IN TERMS IS CLEAR THAT IT APPLIES ONLY TO WHOLESALE (SIC-RET AIL) TRADER WHO IS (SIC-NOT) INVOLVED IN WHOLESALE TRADE. THE TRIBUNAL HAS COME TO THE CONCLUSION THAT REVENUE HAS FAILED TO PROVE THAT AS SESSEE WAS RIGHTLY ASSESSED WHEN HE HAS PRODUCED DOCUMENT BEFO RE THE ASSESSING AUTHORITY THAT HE HOLDS THE LICENCE FOR W HOLESALE TRADE AND, THEREFORE, THE PRESUMPTION HAS NOT BEEN REBUTT ED BY THE REVENUE. IF IT WANTED TO INVOKE S. 44AF , BURDEN WAS ON THE REVENUE TO PROVE THAT NOTWITHSTANDING HOLDING LICEN SE FOR WHOLESALE TRADE ONLY, THE ASSESSEE WAS IN FACT DOIN G RETAIL BUSINESS. THEN ESSENTIALLY IT REMAINS A FINDING OF FACT WHETH ER ASSESSEE WAS A RETAIL TRADER OR WHOLESALE TRADER, AND DOES NOT GIV E RISE TO QUESTION OF LAW. ITA NO. 594/JP/2016 SHRI CHITTER SINGH GURJAR VS. ITO WARD-, 7(2), JAIP UR . 11 7. FURTHER WE ALSO CLARIFY THAT THE LD. AO HAS WRON GLY TAKEN CASH DEPOSIT AMOUNT IN BANK AT RS, 24,33,000/- WHIL E THE SAME WAS AT RS. 22,83,000/- AS MENTIONED IN THE REASONS RECO RDED, BECAUSE THE LD. AO HAS TAKEN RS. 1,50,000/- ON 03.03.2006 A S CASH DEPOSIT WHILE THE SAME WAS THROUGH CHEUQE WHICH IS CLEAR FR OM THE BANK STATEMENT ITSELF. 8. HENCE IN VIEW OF THE ABOVE FACTS, SUBMISSIONS AN D LEGAL POSITION THE ADDITIONS MAY KINDLY BE DELETED IN FUL L. 4.4 THE LD. DR RELIED ON THE ORDERS OF THE AUTHORIT IES BELOW. 4.5 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. ON PERUSAL OF THE BANK STATEME NT AND DOCUMENTS PRODUCED BY THE ASSESSEE, IT IS NOTED THAT THE ASSE SSEE WAS DOING THE TRADING AS BUILDING MATERIAL SUPPLIERS. THE AO TREA TED THE ENTIRE CASH DEPOSITS OF RS. 24,33,000/-IN THE BANK AS UNDISCLOS ED INCOME OF THE ASSESSEE BEING THE EX-PARTIE CASE. IN FIRST APPELLA TE PROCEEDINGS, THE ASSESSEE BEFORE THE LD. CIT(A) FURNISHED THE SALES ACCOUNTS, PURCHASE ACCOUNTS AND CASH FLOW STATEMENTS WHICH WERE SENT T O THE AO FOR HIS COMMENTS. IN THE REMAND REPORT DATED 25.02.2016 PL ACED ON PAPER BOOK PAGE 32, THE AO ADMITTED THE CONTENTION OF THE LD. AR BUT AT THE SAME TIME STATED THAT THE ASSESSEE DID NOT PRODUCE THE BILLS AND VOUCHERS OF SALE/PURCHASE. THE LD. CIT(A) HAD ALSO STATED NO RE TURN OF INCOME WAS FILED BEFORE THE AO OR BEFORE HER. ONLY COMPUTATION WAS FILED. THE ASSESSEE FILED PURCHASE/ SALE / ACCOUNT AND CASH FL OW STATEMENT, HENCE ITA NO. 594/JP/2016 SHRI CHITTER SINGH GURJAR VS. ITO WARD-, 7(2), JAIP UR . 12 BUSINESS OF BUILDING MATERIAL WAS NOT ESTABLISHED/P ROVED. BEFORE THE BENCH, THE LD. AR SUBMITTED THAT ASSESSEE'S ENTI RE SALE WAS IN CASH BUT PURCHASES WERE THROUGH THE ACCOUNT PAYEE CHEQUE. TH E ASSESSEE USED TO DEPOSIT HIS ENTIRE SALE RECEIPTS RECEIVED IN CASH I N THE BANK ACCOUNT. THEREAFTER THE ASSESSEE HAD ISSUED THE CHEQUES TO THE CONCERNED PARTIES FROM WHOM HE USED TO MAKE PURCHASES. ON PERUSAL OF THE BANK STATEMENTS AND NARRATION IN THOSE BANK STATEMENTS, IT IS NOTICED THAT THE PURCHASES OF THE ASSESSEE WAS THROUGH CHEQUE WHICH ESTABLISHES THE TRADING BUSINESS OF THE ASSESSEE. IT IS FURTHER NOT ICED THAT ASSESSEE HAD FURNISHED THE SALES ACCOUNTS, PURCHASE ACCOUNTS AND CASH FLOW STATEMENTS, BANK A/C ETC BEFORE THE AUTHORITIES BELOW. IT IS FU RTHER NOTED THAT THE ASSESSEE IS A RETAIL TRADER AND THE ASSESSEE IS NOT REQUIRED TO MAINTAIN BOOKS OF ACCOUNT AS PER PROVISION OF SECTION 44AF AND THE CASE OF THE ASSESSEE FALL U/S 44AF OF THE ACT. FURTHER THE L D. AR HAS DRAWN THE ATTENTION OF THE BENCH TO THE DECISION OF THE COOR DINATE BENCH IN THE CASE OF ITO KISHANGARH VS. SHRI PUSHPENDRA KUMAR J AIN IN ITA NO. 289/JP/2012 DATED 01.01.2016 WHEREIN THE ITAT BE NCH HAD FOLLOWED THE DECISION OF SMT. ANITA CHOUDHARY IN ITA NO. 73 3/JP/2009 DATED 07.05.2010 AND THE SAME HAD BEEN AFFIRMED BY THE H ON'BLE JURISDICTIONAL HIGH COURT IN DBIT NO. 289/2010 IN THE CASE OF SMT. ANITA CHOUDHARY. ITA NO. 594/JP/2016 SHRI CHITTER SINGH GURJAR VS. ITO WARD-, 7(2), JAIP UR . 13 IT IS ALSO NOTED THAT IN THE CASE OF ITO KISHANGARH VS. SH. PUSHPENDRA KUMAR JAIN (SUPRA), THE ITAT JAIPUR BENCH HAD TREAT ED THE CASH DEPOSIT IN THE BANK ACCOUNT OF THE ASSESSEE AS UNDISCLOSED TURNOVER OF THE ASSESSEE AND DIRECTED TO APPLY THE GROSS PROFIT RA TE @10%. THUS TAKING INTO CONSIDERATION ALL RELEVANT FACTS AND ALSO THE DECISION OF COORDINATE BENCH IN THE CASE OF ITO KISHANGARH VS. SH. PUSHPE NDRA KUMAR JAIN (SUPRA), THE AO IS DIRECTED TO ESTIMATE THE NET INC OME OF ASSESSEE @ 10% ON THE TURNOVER OF RS. 23.05 LACS. THUS THE APPEA L OF THE ASSESSEE IS PARTLY ALLOWED. 5.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 /09 /2016. SD/- HKKXPUN ( BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 26/09/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI CHITTAR SINGH GURJAR, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD- 7(2), JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 594/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR
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