Shri Mohit Mundra, Jaipur, Jaipur V. ITO Ward-4(1), Jaipur, Ward-4(1), Jaipur

ITA 594/JPR/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9191 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 29-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RUNI PAL DCIT
• Keywords: Salary income
• Section: 44AD; 145(3); 20

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH VC B, JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; ,O A JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO. 594/JP/2019 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2015-16. SHRI MOHIT MUNDRA, 304, KRISHNA KRIPA-1, SUBHASH NAGAR SHOPPING CENTRE, JAIPUR. CUKE VS. THE INCOME TAX OFFICER, WARD 4(1), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AVOPM 9441 C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI S.L. PODDAR (ADVOCATE) JKTLO DH VKSJ LS@ REVENUE BY : SMT. RUNI PAL (DCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 05.08.2020. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 11/08/2020. VKNS'K@ ORDER PER VIJAY PAL RAO, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 27 TH MARCH, 2019 OF LD. CIT (A)-2, JAIPUR FOR THE ASSESSMENT YEAR 20 15-16. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND :- 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT (A) HAS ERRED IN CONFIRMING THE ACTION OF THE LEARNED AO IN INVOKING THE PROVISIONS OF SECTION 145(3) OF THE INCOME TAX ACT, 1961 THEREBY APPLYING THE NP RATE @ 8% ON ENHANCED TURNOVER OF RS . 79,74,414/- FOR MAKING ADDITION OF RS. 5,50,329/-. 2. THE ASSESSEE CRAVES YOUR INDULGENCE TO ADD, AMEN D OR ALTER ALL OR ANY GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEAR ING. 2 ITA NO. 594/JP/2019. SHRI MOHIT MUNDRA, JAIPUR. 2. THE ASSESSEE IS AN INDIVIDUAL AND PROPRIETOR OF M/S. MAHAVEER CHEMICALS AND ENGAGED IN THE BUSINESS OF RETAIL TRADING OF GROCER Y ITEMS AND SPICES ETC. THE ASSESSEE FILED HIS RETURN OF INCOME ON 17.12.2015 DECLARING TOTAL INCOME OF RS. 5,00,400/-. THE ASSESSEE HAS COMPUTED NET PROFIT UNDER THE PROVISIO NS OF SECTION 44AD @ 8% ON THE TOTAL TURNOVER OF RS. 10,95,300/- WHICH COMES TO RS . 87,624/-. DURING THE ASSESSMENT PROCEEDINGS, THE AO NOTED THAT THERE WAS TOTAL CRED ITS IN THE BANK ACCOUNT OF THE ASSESSEE OF RS. 79,74,414/- INCLUDING CASH DEPOSIT OF RS. 55,41,458/-. THE AO ASKED THE ASSESSEE TO EXPLAIN IN RESPECT OF THE CASH DEPO SITS IN THE SAID BANK ACCOUNT WHICH IS MORE THAN TURNOVER. IN RESPONSE, THE ASSESSEE H AS SUBMITTED THAT PART OF THE CASH DEPOSIT IS REPRESENTING THE SALES OF THE ASSESSEE A ND PART IS EARLIER WITHDRAWALS OF CASH FROM THE BANK ACCOUNT. THE AO WAS NOT SATISFIED WI TH THE EXPLANATION OF THE ASSESSEE AND TOOK THE ENTIRE CREDIT IN THE BANK ACCOUNT OF R S. 79,74,414/- AS THE TURNOVER OF THE ASSESSEE AND APPLIED NP RATE OF 8%. ACCORDINGLY, TH E AO HAS ARRIVED AT THE TOTAL INCOME OF THE ASSESSEE AT RS. 10,50,729/- AS AGAINS T THE INCOME DECLARED BY THE ASSESSEE AT RS. 5,00,400/-. THE ASSESSEE CHALLENGE D THE ACTION OF THE AO BEFORE THE LD. CIT (A) AND SUBMITTED THAT THE CREDIT AND DEPOS ITS MADE IN THE BANK ACCOUNT ARE MAINLY REPRESENTING THE LOANS TAKEN FROM FAMILY MEM BERS AND EARLIER WITHDRAWALS OF THE ASSESSEE. FURTHER, SOME OF THE CREDITS ARE TRA NSFERRED FROM ONE BANK TO ANOTHER BANK AND, THEREFORE, THE ASSESSEE CLAIMED THAT EXCE PT THE TURNOVER DECLARED BY THE ASSESSEE, ALL OTHER DEPOSITS AND CREDITS IN THE BAN K ACCOUNT ARE SOURCE FROM THE LOANS AS WELL AS EARLIER WITHDRAWALS. THE LD. CIT (A) HA S CONFIRMED THE ADDITION MADE BY THE 3 ITA NO. 594/JP/2019. SHRI MOHIT MUNDRA, JAIPUR. AO BASED ON THE TOTAL TURNOVER ADOPTED BY THE AO AT RS. 79,74,414/- AS AGAINST THE TURNOVER OF RS. 10,95,300/- DECLARED BY THE ASSESSE E. 3. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS SUBMI TTED THAT THE ASSESSEE IS MAINTAINING CASH BOOK, LEDGER, JOURNAL, PURCHASES A ND SALES VOUCHERS. ALL THE ENTRIES IN THE BANK ACCOUNT ARE MATCHING WITH THE CASH BOOK AS WELL AS LEDGER ACCOUNT MAINTAINED BY THE ASSESSEE, THEREFORE, THE ASSESSEE HAS RECONC ILED ALL THE TRANSACTIONS OF DEPOSIT IN THE BANK ACCOUNT THROUGH CASH AS WELL AS CHEQUE. H E HAS FURTHER SUBMITTED THAT THE ASSESSEE PRODUCED THE CASH BOOK, LEDGER ACCOUNT AS WELL AS BANK ACCOUNT STATEMENT BEFORE THE AO. ONCE THE ENTRIES IN THE CASH BOOK, LEDGER ACCOUNT AND THE BANK ACCOUNT ARE DULY MATCHING AND NO DISCREPANCY IS FOUND, THEN THE AO IS NOT JUSTIFIED IN TREATING THE DEPOSITS AND CREDITS IN THE BANK ACCOUNT AS TUR NOVER OF THE ASSESSEE. HE HAS POINTED OUT THAT THE ASSESSEE HAS EXPLAINED THAT TH E ASSESSEE RECEIVED SALARY OF RS. 3,87,118/- WHICH IS ALSO DEPOSITED IN THE BANK ACCO UNT. THE SAID AMOUNT IS ALSO DECLARED IN THE RETURN OF INCOME AND THE AO HAS NOT DISPUTED THE SAME. THE ASSESSEE RECEIVED THE LOAN OF RS. 16,89,100/- FROM MS PADMA MUNDRA, SISTER OF THE ASSESSEE AND THE DETAILS OF THE SAID LOAN WAS FURNISHED BEFORE T HE AO AS PART OF THE CASH BOOK, LEDGER ACCOUNT AND BANK STATEMENTS. FURTHER THE LO AN OF RS. 6,47,500/- WAS TAKEN FROM SHRI GOPAL MUNDRA WHICH IS ALSO REFLECTED IN T HE DOCUMENTS PRODUCED BY THE ASSESSEE BEFORE THE AO. THUS THE LOAN TAKEN FROM TH E FAMILY MEMBERS IS THE AMOUNT REPRESENTING THE DEPOSITS AND CREDITS IN THE BANK A CCOUNT. THE LD. A/R HAS FURTHER POINTED OUT THAT A SUM OF RS. 12,18,000/- IS REPRES ENTING THE TRANSFERS FROM ONE BANK ACCOUNT TO ANOTHER BANK ACCOUNT. THIS IS A MATTER OF RECORD BUT THE AO HAS IGNORED ALL 4 ITA NO. 594/JP/2019. SHRI MOHIT MUNDRA, JAIPUR. THESE FACTS. THESE ITEMS WHICH INCLUDE THE TURNOVE R, SALARY INCOME, LOANS TAKEN FROM THE RELATIVES/FAMILY MEMBERS, TRANSFER FROM ONE BAN K ACCOUNT TO ANOTHER BANK ACCOUNT COMES TO RS. 49,92,447/- AND THE BALANCE AMOUNT OF RS. 29,81,967/- IS SOURCE FROM THE CASH WITHDRAWALS BY THE ASSESSEE FROM THE BANK WHIC H WAS SUBSEQUENTLY DEPOSITED IN THE BANK. THUS THE LD. A/R HAS SUBMITTED THAT THE A SSESSEE HAS EXPLAINED THE ENTIRE DEPOSIT MADE IN THE BANK ACCOUNT BUT THE AO AS WELL AS LD. CIT (A) HAS FAILED TO CONSIDER THE FACTS WHICH ARE DULY REFLECTED IN THE RECORD INCLUDING THE BANK ACCOUNT STATEMENT AND MADE THE ADDITION ON THE ENTIRE CREDI T IN THE BANK ACCOUNT OF THE ASSESSEE. HENCE THE LD. A/R HAS ALSO CHALLENGED TH E NET PROFIT OF 8% APPLIED BY THE AO AND SUBMITTED THAT THE COORDINATE BENCH OF THIS TRI BUNAL IN THE CASE OF SHRI GOPAL MUNDRA VS. ITO IN ITA NO. 1296/JP/2018 VIDE ORDER D ATED 2 ND APRIL, 2019 HAS APPLIED THE NET PROFIT AT 6%. 4. ON THE OTHER HAND, THE LD. D/R HAS SUBMITTED THA T THIS CASE WAS TAKEN FOR LIMITED SCRUTINY IN THE BANK ACCOUNT OF THE ASSESSEE. THE ASSESSEE HAS NOT SUBMITTED SATISFACTORY EXPLANATION ABOUT THE SOURCE OF DEPOSI TS MADE IN THE BANK ACCOUNT TO THE TUNE OF RS. 79,74,414/-. THE AO HAS NOTED THAT THE ASSESSEE IS MAKING PURCHASES IN CASH AND ALSO SALES IN CASH, THEREFORE, THE WITHDRA WALS FROM THE BANK ACCOUNT WOULD HAVE BEEN UTILIZED FOR MAKING THE PURCHASES AND INC URRING OTHER EXPENDITURES AND CANNOT BE TREATED AS SOURCE OF DEPOSIT MADE BY THE ASSESSEE. SHE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CONSIDER ED THE RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE THAT THE ASSESSEE HAS D ECLARED THE NET PROFIT ON 5 ITA NO. 594/JP/2019. SHRI MOHIT MUNDRA, JAIPUR. PRESUMPTIVE BASIS UNDER SECTION 44AD OF THE IT ACT @ 8%. THE ASSESSEE HAS DECLARED THE TURNOVER OF RS. 10,95,300/- ON WHICH NP OF RS. 87,624/- WAS DECLARED IN THE RETURN OF INCOME, THOUGH THE ASSESSEE HAS ALSO DECLARED T HE INCOME FROM SALARY AND INCOME FROM OTHER SOURCES TOTAL OF RS. 5,00,400/-. DURING THE LIMITED SCRUTINY ASSESSMENT THE AO ASKED THE ASSESSEE TO EXPLAIN THE CASH DEPOSIT I N THE BANK ACCOUNT OF RS. 55,41,481/-. THIS FACT HAS BEEN RECORDED BY THE AO IN PARA 3 OF THE ASSESSMENT ORDER AS UNDER :- 3. DURING THE PROCEEDINGS, ASSESSEE WAS ASKED TO FURNISH EXPLANATION IN RESPECT OF CASH DEPOSIT IN SAVING BANK ACCOUNT IS MORE THAN TURNOVER. ON PERUSAL OF BANK ACCOUNTS, IT HAS BEEN NOTICED TH AT TOTAL CREDITS IN BANK ACCOUNTS ARE RS. 79,74,414/- INCLUDING CASH DEPOSIT OF RS. 55,41,458/-. THEREFORE, THE AO HIMSELF HAS ASKED THE ASSESSEE TO EXPLAIN THE DEPOSIT IN THE BANK ACCOUNT IN CASH AND NOT THE ENTIRE CREDIT IN THE BA NK ACCOUNT. THE BALANCE AMOUNT WAS CREDITED IN THE BANK ACCOUNT BUT NOT A DEPOSIT IN C ASH, THEREFORE, THE SOURCE OF THE BALANCE WAS NOT DOUBTED OR DISPUTED BY THE AO WHILE ISSUING THE SHOW CAUSE NOTICE. EVEN OTHERWISE THE DEPOSIT MADE IN THE BANK ACCOUNT THROUGH CHEQUE IS SELF- EXPLANATORY AND COULD HAVE BEEN VERIFIED FROM THE D ETAILS. THE AO HAS ACCEPTED THIS FACT THAT THE ENTIRE SALE OF THE ASSESSEE IS IN CAS H. THEREFORE, THE DEPOSIT IN THE BANK ACCOUNT THROUGH CHEQUE IS OTHERWISE NOT ON ACCOUNT OF NOT REPRESENTING THE TURNOVER OF THE ASSESSEE. THE ASSESSEE HAS EXPLAINED THE SOURC E OF ENTIRE DEPOSIT IN THE BANK ACCOUNT AS UNDER :- 6 ITA NO. 594/JP/2019. SHRI MOHIT MUNDRA, JAIPUR. GROSS RECEIPTS/TURNOVER DECLARED BY THE ASSESSEE RS. 10,95,300/- SALARY INCOME RS. 3,87,118/- THESE TWO AMOUNTS ARE NOT IN DISPUTE AS DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME. THE ASSESSEE HAS ALSO EXPLAINED LOAN OF RS . 16,89,100/- TAKEN FROM SMT. PADMA MUNDRA, SISTER OF THE ASSESSEE. IN SUPPORT O F THIS LOAN, THE ASSESSEE HAS PRODUCED THE LOAN LEDGER ACCOUNT, CASH BOOK AND BAN K ACCOUNT STATEMENT. THE TRANSACTIONS SHOWN IN THE LEDGER ACCOUNT, CASH BOOK AND BANK STATEMENTS ARE DULY MATCHED AND RECONCILED. EVEN THE AO HAS NOT POINTE D OUT ANY DISCREPANCY IN RESPECT OF ANY TRANSACTION SHOWN IN THE LOAN LEDGER ACCOUNT , CASH BOOK AND BANK ACCOUNT STATEMENTS OF THE ASSESSEE. THE ASSESSEE HAS GIVEN EACH AND EVERY TRANSACTION DATE- WISE, BANK ACCOUNT DETAILS IN THE NARRATION OF THE TRANSACTION IN THE LEDGER AND THE CORRESPONDING ENTRIES ARE ALSO RECORDED IN THE CASH BOOK AND MATCHING WITH THE ASSESSEES BANK ACCOUNT STATEMENTS. THEREFORE, ONC E THESE AMOUNTS ARE REFLECTED IN THE BANK ACCOUNT STATEMENTS, LEDGER ACCOUNT AND CAS H BOOK PRODUCED BY THE ASSESSEE, THEN IN THE ABSENCE OF ANY CONTRARY MATERIAL BROUGH T ON RECORD BY THE AO BY CONDUCTING AN ENQUIRY, THE SOURCE EXPLAINED BY THE ASSESSEE CANNOT BE REJECTED MERELY ON SURMISES. IN CASE THE AO WAS NOT SATISFIED WITH THE DOCUMENTARY EVIDENCE PRODUCED BY THE ASSESSEE REGARDING THE CORRECTNESS, THEN A FURTHER ENQUIRY WOULD HAVE BEEN CONDUCTED FROM THE OTHER PARTIES WHOM FROM THE ASSESSEE HAVE CLAIMED TO HAVE OBTAINED THE LOAN. FURTHER A SUM OF RS. 6,47,500/- IS ALSO A LOAN AMOUNT TAKEN FROM ONE SHRI GOPAL MUNDRA AND THE ASSESSEE HAS PRODUCED ALL THE DOCUMENTS BEING LEDGER 7 ITA NO. 594/JP/2019. SHRI MOHIT MUNDRA, JAIPUR. ACCOUNT, BANK ACCOUNT STATEMENT AND CASH BOOK WHERE IN THE ENTRIES ARE TALLYING IN ALL THREE ACCOUNTS. THEREFORE, ONCE THE ASSESSEE HAS E XPLAINED THE SOURCE OF DEPOSIT OF CASH IN THE BANK ACCOUNT, THEN TAKING THE ENTIRE CR EDIT IN THE BANK ACCOUNT AS TURNOVER OF THE ASSESSEE IS HIGHLY ARBITRARY AND UNREASONABL E ON THE PART OF THE AO. THE ASSESSEE HAS EXPLAINED THAT A SUM OF RS. 12,18,000/ - IS TRANSFERRED FROM ASSESEES OWN SAVINGS BANK ACCOUNT TO ANOTHER ACCOUNT, AND THEREF ORE, THE SAME CANNOT BE TREATED AS A TURNOVER OF THE ASSESSEE OR UNEXPLAINED DEPOSIT. THE AO HAS NOT CONDUCTED THE BARE MINIMUM ENQUIRY EVEN TO EXCLUDE SUCH TRANSACTIONS W HICH ARE INTER-TRANSFER OF BANK ACCOUNT OF THE ASSESSEE. THE ASSESSEE HAS ALSO EXP LAINED THE DEPOSIT TO THE EXTENT OF RS. 29,81,967/- BEING THE PRIOR CASH WITHDRAWAL BY THE ASSESSEE THOUGH THE SAID AMOUNT OF WITHDRAWAL MAY NOT BE ENTIRELY RE-DEPOSI TED IN THE BANK ACCOUNT. HOWEVER, ONCE THE AO HAS TAKEN UP THE SCRUTINY ONLY WITH RES PECT TO THE CASH DEPOSIT OF RS. 55,41,451/-, THEN THE EXPLANATION OF THE SOURCE TO THE EXTENT OF SAID AMOUNT WERE NEEDED. THEREFORE, WE FIND THAT SINCE THE ASSESSEE HAS ALREADY EXPLAINED THE SOURCE OF AMOUNT OF TURNOVER DECLARED BY THE ASSESSEE, SALARY INCOME AND LOANS FROM THE RELATIVES, THEN THE ACTION OF THE AO BY TAKING THE ENTIRE BANK AMOUNT AS TURNOVER OF THE ASSESSEE IS CONTRARY TO THE FACTS. ACCORDINGLY, IN THE FACTS AND CIRCUMSTANCES OF THE CASE WHEN THE ASSESSEE HAS DISCHARGED HIS ONUS OF E XPLAINING THE SOURCE OF DEPOSIT IN THE BANK ACCOUNT AND THE AO HAS FAILED TO CONDUCT A NY FURTHER ENQUIRY OR BRING ANY CONTRARY MATERIAL ON RECORD TO DISPROVE THE EXPLANA TION AND EVIDENCE PRODUCED BY THE ASSESSEE, THE ADDITION MADE BY THE AO IS NOT SUSTAI NABLE. ACCORDINGLY, THE SAID ADDITION MADE BY THE AO ON ACCOUNT OF TURNOVER OF T HE ASSESSEE IS DELETED. 8 ITA NO. 594/JP/2019. SHRI MOHIT MUNDRA, JAIPUR. 5.1. AS REGARDS THE NET PROFIT RATE APPLIED BY THE AO AT 8%, SINCE THE MAIN ISSUE OF ENHANCING THE TURNOVER OF THE ASSESSEE IS DECIDED I N FAVOUR OF THE ASSESSEE, THEREFORE, THIS ISSUE BECOMES INFRUCTUOUS. WE MAY CLARIFY THA T THE AO HAS NOT ENHANCED THE NP RATE BUT APPLIED THE SAME NP RATE WHICH WAS DECLARE D BY THE ASSESSEE IN THE RETURN OF INCOME. THEREFORE, THE ASSESSEE HAS NO MERIT ON THI S ISSUE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER IS PRONOUNCED IN THE OPEN COURT ON 11/08/ 2020. SD/- SD/- ( FOE FLAG ;KNO ) ( FOT; IKY JKWO (VIKRAM SINGH YADAV ) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 11/08/2020. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- SHRI MOHIT MUNDRA, JAIPUR. 2. THE RESPONDENT THE ITO WARD 4(1), JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 594/JP/2019) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 9 ITA NO. 594/JP/2019. SHRI MOHIT MUNDRA, JAIPUR.