Appeal Details
Counselvise Citation
[2013] 120 COUNSELVISE.COM (IT) 1931 (ITAT-NAGPUR)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 11 month(s) 13 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
02-01-2013
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
DB
Assessment Year
2006-2007
Appeal Filed On
20-01-2010
Judgement Text
, - IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR , BENCH , ( E - COURT), MUMBAI , BEFORE SHRI R.K.GUPTA , J M & SHRI D.KARUNA KAR RAO , A M ITA NO. 06 / N AG / 20 10 ( ASSESSMENT YEAR : 200 6 - 20 0 7 ) ITO, WARD - 8 (1) , NAGPUR (MAHARASHTRA) . VS. SHRI SUDHIR NARAYANRAO RANDIVE, PROP. SUDHIR ELECTRICALS, PLOT NO.1, SEETA NAGAR,WARDHA ROAD, NAGPUR (MAHARASHTRA) PAN/GIR NO. : A DAPR 1761 L ( APPELLANT ) .. ( RESPONDENT ) /REVENUE BY : SHRI RAMESH D AWANDE /A SSESSEE BY : SHRI M.MANI DATE OF HEARING : 10 TH DEC ., 2012 DATE OF PRONOUNCEMENT : 2 ND J AN . ,201 3 O R D E R P ER SHRI R.K.G UPTA, JM : TH E DEPARTMENT HAS PREFERRED THIS APPEAL BEFORE THE ITAT NAGPUR BENCH, NAGPUR, AGAINST THE ORDER DATED 28 - 10 - 2009 OF LEANED CIT (A) - II , NAGPUR (MAHARASHTRA) RELA TING TO THE ASSESSMENT YEAR 200 6 - 0 7 , WHICH HAS BEEN HEARD THROUGH E - COURT, MUMBAI ON THE FOLLOWING GROUNDS : - 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT - (A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 24 ,39,548/ - MADE BY THE A.O. ON ACCOUNT OF SUNDRY CREDITS NOT FOUND TO BE GENUINE? ITA NO. 06 /20 10 2 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT - (A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.4,51,480/ - MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CASH CREDITS U/S.68 OF THE I.T.ACT, 1961? 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT - (A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.27,71,706/ - MADE BY THE AO ON ACCOUNT OF UNEXPLAINED INVESTMENT U/S.69 OF THE I.T.ACT, 1961? 4. WHETHER ON THE FA CTS AND CIRCUMSTANCES OF THE CASE THE CIT - (A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.2,84,065/ - MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF VARIOUS EXPENSES ? 2 . THE RETURN DECLARING INCOME OF RS. 3,92, 324/ - WAS FILED SHOWING GROSS RECEIPTS OF RS. 36 ,04,480/ - . NET PROFIT WAS WORKED OUT MORE THAN 10% ON THE GROSS RECEIPTS. IT WAS STATED BEFORE THE AO THAT THE ASSESSEE IS A CONTRACTOR AND PROVISION OF SECTION 44AD ARE APPLICABLE AND THE NET PROFIT SHOWN BY THE ASSESSEE IS MORE THAN 8%, WHICH IS ASSESSA BLE UNDER SECTION 44AD, THEREFORE, NO DETAIL ENQUIRY IS REQUIRED IN THIS CASE. HOWEVER, THE AO WAS NOT SATISFIED, THEREFORE, IGNORING THE PROVISION OF SECTION 44AD, HE PROCEEDED TO COMPLETE ASSESSMENT AFTER EXAMINING PROFIT AND LOSS ACCOUNTS AND RECEIPTS E TC. 2.1 AFTER EXAMINING THE DETAILS, THE AO NOTED THAT THE ASSESSEE COULD NOT FILE THE CONFIRMATION OF C REDITORS OF RS. 24,39,548/ - , ACCORDINGLY ADDITION WAS MADE. A FURTHER ADDITION OF RS. 4,51,480/ - WAS MADE ON ACCOUNT OF CASH CREDITS IN RESPECT OF HOUSE PROPERTY RECEIVED ON DEATH OF FATHER AS THE ASSESSEE COULD NOT LEAD PROPER EVIDENCES. A SUM OF RS. 27,71,706/ - WAS ALSO ADDED UNDER SECTION 69 ON THE BASIS OF CREDIT IN THE BANK ACCOUNT AS CREDITED IN THE BANK ACCOUNT WAS OF RS. 54, 87,626/ - , WHEREAS TOTAL G ROSS RECEIPTS WERE SHOWN BY THE ASSESSEE AT RS. 36,04, 480/ - . ACCORDINGLY, HE ADDED DIFFERENCE OF TWO ITA NO. 06 /20 10 3 ACCOUNTS. THE AO ALSO DISALLOWED THE EXPENSES OF RS. 2,84,065/ - AND SUM OF RS. 10,062/ - ON ACCOUNT OF DIFFERENCE IN BANK. THE ASSESSEE PREFERRED AN APPEAL BEF ORE THE CIT(A), WHO HELD THAT PROVISION S OF SECTION 44AD ARE APPLICABLE ON THE FACTS OF THE PRESENT CASE. THEREFORE, THE AO WAS NOT REQUIRED TO CONDUCT DEEP INVESTIGATION INTO THE PETTY CONTRARY BUSINESS CARRIED ON BY THE ASSESSEE . A SSESSEE HAS RETURNED TH E INCOME INCOMPLIANCE WITH THE CONDITION LAID DOWN UNDER SECTION 44AD OF THE ACT. SUCH FINDING OF THE CIT(A) HAS BEEN RECORDED IN PARA 3.1 AT PAGE 2 OF THE ORDER. THEREAFTER THE CIT(A) DECIDED THE ISSUE ON MERITS ALSO AS LEARNED AR ARGUED ON MERITS ALSO BE FORE HIM. AFTER TAKING THE WRITTEN SUBMISSION FROM THE ASSESSEE, THE REMAND REPORT WAS SOUGHT FROM THE AO AND IN THE REMAND REPORT THE AO HAS CLEARLY STATED THAT HE HAS EXAMINED ALL THE BOOKS OF ACCOUNTS, EVIDENCES FILED BEFORE THE CIT(A) AND FOUND THAT NO ADDITION CAN BE MADE. THEREAFTER LEARNED CIT(A) AFTER DISCUSSING THE ISSUE IN DETAIL AND TAKING INTO CONSIDERATION THE SUBMISSION OF THE ASSESSEE AND THE REMAND REPORT OF THE AO, FOUND THAT ADDITION MADE BY THE AO CANNOT BE SUSTAINED ON MERIT EVEN. ACCORD INGLY, THESE ADDITIONS WERE DELETED BY C IT(A) . NOW, THE DEPARTMENT HAS CHALLENGED ALL THESE ADDITIONS DELETED BY THE CIT(A), HERE BEFORE THE TRIBUNAL. 3 . THE LEARNED DR SIMPLY PLACED RELIANCE ON THE ORDER OF THE AO. ON THE OTHER HAND, LEARNED COUNSEL OF T HE ASSESSEE PLACED RELIANCE ON THE ORDER OF THE CIT(A) . IT WAS ALSO SUBMITTED THAT PROVISION OF SECTION 44AD ARE APPLICABLE ON THE FACTS OF THE CASE AND THE CIT(A) HAS ITA NO. 06 /20 10 4 ADMITTED THAT PROVISION OF SECTION 44AD ARE NOT APPLICABLE AND NO GROUND HAS BEEN TAKEN AGAINST THESE FINDINGS OF THE CIT(A) . THEREFORE FOR THIS REASON ALONE, THE ORDER OF CIT(A) IS LIABLE TO BE SUSTAINED. 4 . WE HAVE HEARD RIVAL SUBMISSIONS AND CONSIDERED THEM CAREFULLY. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, WE FIND NO INFIRMITY IN THE FINDINGS OF THE LEARNED CIT(A) . WE FIND WEIGHT OF THE CONTENTION OF THE LEARNED AR OF THE ASSESSEE THAT THE CIT(A) HAS CATEGORICALLY HELD THAT PROVISION OF SECTION 44AD ARE APPLICABLE ON THE FACTS OF THE PRESENT CASE. THE CIT(A ) HAS RECORDED A FINDING IN PARA 3.1 THAT THERE IS A MERIT IN THE APPELLANTS SUBMISSION THAT HE IS NOT REQUIRED TO MAINTAIN THE REGULAR BOOKS OF ACCOUNTS AND THE AO IS NOT REQUIRED TO SCRUTINIZE HIS CASE, THE MANNER IN WHICH IT IS DONE. IT IS ALSO SUBMIT TED BY THE APPELLANT THAT THE AO WAS NOT REQUIRED TO CONDUCT DEEP INVESTIGATION INTO THE PETTY CONTRACT BUSINESS CARRIED ON BY THE APPELLANT SINCE HE HAS RETURNED THE INCOME INCOMPLIANCE WITH THE CONDITIONS LAID DOWN UNDER SECTION 44AD OF THE I.T. ACT. TH IS FINDING HAS NOT BEEN CHALLENGED BY THE DEPARTMENT. HOWEVER, SINCE THE LEARNED CIT(A) DISPOSED ALL THE ISSUES ON MERITS, THEREFORE, WE ALSO DISPOSED OF THE ISSUES ON MERIT. 5 . THE FIRST ISSUE IS IN RESPECT OF ADDITION OF RS. 24,39 ,548/ - . THIS ADDITION W AS MADE BY THE AO BY OBSERVING THAT THE ASSESSEE FAILED TO FILE THE DETAILS IN RESPECT OF CREDITORS. THEREFORE, THEY ARE TREATED AS UNEXPLAINED SUNDRY CREDITS. IT WAS SUBMITTED BEFORE THE CIT(A) THAT THE AO HAS NOT EXAMINED THE PURCHASES AND, THEREFORE, AR RIVED AT THE ITA NO. 06 /20 10 5 ERRONEOUS CONCLUSION. IT WAS SUBMITTED THAT THE ASSESSEES OPENING BALANCE AND PURCHASES WERE ONLY RS. 6,17,207/ - DURING THE YEAR UNDER CONSIDERATION. THE TURN OVER OF RS.36,04,480/ - WAS MADE OUT OF OPENING STOCK AND PURCHASES MADE DURING THE Y EAR. IN THE REMAND REPORT, THE AO HAS STATED THAT THE ASSESSEE HAS NOT FURNISHED THE CONFIRMATION WITH REGARD TO SUNDRY CREDITORS AMOUNTING TO ONLY RS. 6,17,207/ - , WHILE THE OPENING BALANCES OF THE SUNDRY CREDITORS WAS SATISFACTORILY EXPLAINED. TAKING INTO CONSIDERATION THE REMAND REPORT AND THE CONTENTION OF THE ASSESSEE, THE CIT(A) FOUND THAT NO ADDITION WAS WARRANTED AS THE PROFIT SHOWN BY THE ASSESSEE ON PURCHASES IS MORE THAN 8% PROFIT UNDER THE PROVISION OF SECTION 44AD. THE ASSESSEE WAS NOT REQUIRED TO MAINTAIN ANY BOOKS OF ACCOUNT, THEREFORE, IT IS NOT NECESSARY TO COMPLY WITH THE MAINTENANCE OF THE REGULAR BOOKS OF ACCOUNTS OR OTHER ITEMS. ACCORDINGLY, HE DELETED THE ADDITIONS. LEARNED CIT(A) HAS ALSO NOTED THAT THE GROSS RECEIPTS IS LESS THAN RS.40 , 00, 000/ - , THEREFORE, THE ASSESSEE WAS NOT LIABLE TO GET HIS ACCOUNT AUDITED EVEN. SINCE THE AO HIMSELF WAS SATISFIED WITH THE OPENING BALANCE OF ACCOUNT OF SUNDRY CREDITORS AND ONLY CONFIRMATION OF RS. 6 LAKHS COULD NOT BE FILED, IT DOES NOT ATTRACT ANY AD DITION WHEREAS THE ASSESSEE HAS SHOWN MORE THAN 8%. TH IS FINDING OF THE LEARNED CIT(A) REMAINED UNCONTROVERTED, THEREFORE, WE SEE NO INFIRMITY IN THE FINDINGS OF THE LEARNED CIT(A) . ACCORDINGLY, WE CONFIRM THE ORDER OF THE LEARNED C IT(A) IN DELETING THE AD DITION OF RS. 24,39,548/ - . 6 . THE NEXT ISSUE RELATES TO ADDITION OF RS. 4,51,480/ - . ITA NO. 06 /20 10 6 6.1 THE ISSUE WAS REEXAMINED BY THE AO DURING THE REMAND PROCEEDING AND THE AO HAS STATED IN THE REMAND REPORT THAT ADDITION OF RS. 4,51,480/ - WAS NOT CALLED FOR, AS THE A SSESSEE HAS FURNISHED FULL DETAILS IN RESPECT OF THE CREDIT RECEIPTS ON THE DEATH OF THE FATHER OF THE ASSESSEE. ACCORDINGLY, THE ADDITION WAS DELETED BY THE CIT(A). 7. AGAIN, WE DO NOT FIND UNREASONABLENESS IN THE ORDER OF THE CIT(A) AS THE CIT(A) HAD D ELETED THE ADDITION ON THE BASIS OF REMAND REPORT, WHEREBY IT WAS STATED THAT THIS ADDITION WAS NOT CALLED FOR. ACCORDINGLY, THE ORDER OF THE LEARNED CIT(A) IS CONFIRMED ON THIS ALSO. 8 . THE NEXT ISSUE RELATES TO DELETION OF ADDITION OF RS. 27,71,706/ - ON ACCOUNT OF CREDIT ENTRIES IN THE BANK PASS BOOKS. 9 . ACCORDING TO THE AO, THE TOTAL CREDITS IN THE BANK ACCOUNT WORKED OUT TO R S. 63,76 ,186/ - , WHEREAS THE TOTAL CONTRACT RECEIPTS WAS ONLY RS. 36,04,480/ - . ACCORDINGLY, THE AO ADDED THE DIFFEREN CE OF RS. 27, 71,706/ - AS UNEXPLAINED INCOME UNDER SECTION 69 OF THE ACT. IT WAS EXPLAINED BEFORE THE LEARNED CIT(A) THAT THE ASSESSEE HAS MAINTAINED THREE ACCOUNTS IN THE BANK AND TOTAL OF THESE THREE ACCOUNTS COMES TO RS. 54,87,626/ - AND NOT RS. 63,76,186/ - . THE DETAILS OF THESE THREE ACCOUNTS WERE ALSO FILED, WHICH ARE TABULATED IN THE ORDER OF THE LEARNED CIT(A) IN PARA 6.2 AS UNDER : - TIRUPATI URBAN CO - OP BANK, NAGPUR A/C NO.253 RS. 28,90,650/ - TIRUPATI URBAN CO - OP BANK, MAIN BRANCH NAGPUR A/C NO. 4 RS.28,90,650/ - BANK OF INDIA SOMALWADA BRANCH NAGPUR A/C NO. 54 RS. 24 , 36 , 976 / - TOTAL RS. RS.54,87,626/ - ITA NO. 06 /20 10 7 9.1 IT WAS FURTHER SUBMITTED THAT AN AMOUNT OF RS. 2450405/ - WAS RECEI VED FROM DATTA MEGHE INSTITUTE OF MEDICAL SCIENCES, WARDHA ON 22/03/2006 AS ADVANCE F OR EXECUTION OF FUTURE CONTRACT TO BE SETTLED LATTER. THIS AMOUNT WAS DEPOSITED AS A FIXED DEPOSIT IN THE BANK. AS THERE DEVELOPED DISPUTE ON THE QUESTION OF EXECUTION OF THE CONTRACT AND ITS TERM THE CONTRACT WAS CANCELLED AND THE MONEY WAS RETURNED TO DA TTA MEGHE INSTITUTE OF MEDICAL SCIENCES , WARDHA ON 20/03/2007 ALONG WITH THE INTEREST EARNED ON THE FIXED DEPOSIT. THIS IS NOT CONTRACT RECEIPT BUT ONLY AN ADVANCE FOR FUTURE CONTRACT, WHICH DID NOT MATERIALIZE. THEREAFTER THE LEARNED CIT(A) SOUGHT REMAND REPORT AND IN REMAND REPORT, THE AO SUBMITTED THAT THE DIFFERENCE POINTED OUT BY THE AO IN ASSESSMENT ORDER HAS BEEN RECONCILED AND THE EXPLANATION OF THE ASSESSEE IS ACCEPTABLE. SINCE THE RECONCILIATION FILED BY THE ASSESSEE WAS CORRECT, ACCORDINGLY, THE CIT(A) DELETED THE ADDITION. 10. THE ADDITION DELETED BY THE CIT(A) WAS DELETED ON THE BASIS OF REMAND REPORT. THEREFORE, THERE IS NO REASON TO INTERFERE IN THE FINDINGS OF THE CIT(A) ON THIS ISSUE. ACCORDINGLY, WE CONFIRM THE ORDER OF LEARNED CIT(A) ON THIS ISSUE ALSO. 11 . REMAINING ISSUE IS AGAINST DELETION OF RS. 2,54,065/ - ON ACCOUNT OF VARIOUS EXPENSES. 1 2 . THE AO DISALLOWED A SUM OF RS. 2,84,065/ - ON THE GROUND THAT THE ASSESSEE HAS NOT PRODUCED THE BOOKS OF ACCOUNTS ALONG WITH BILLS, VOUCHERS AND OTHER SUPPORTING EVIDENCES SO AS TO SATISFACTORILY ITA NO. 06 /20 10 8 EXPLAINED ALL THE EXPENSES INCURRED BY THE ASSESSEE. THEREFORE, THE AO DISALLOWED 10% OF SUCH EXPENSES CLAIMED. LEARNED CIT(A) DELETED THE DISALLOWANCE BY OBSERVING THAT THE ASSESSEE HAS FILED THE RE TURN IN VIEW OF THE SECTION 44AD. AS PER PROVISION OF SECTION 44AD, THE INCOME SHOULD HAVE BEEN CALCULATED 8% WHEREAS THE ASSESSEE HAS SHOWN INCOME MORE THAN 8%, THEREFORE, THE CIT(A) NOTED THAT NO SEPARATE DISALLOWANCE WAS WARRANTED. ACCORDINGLY, THIS ADDITION WAS ALSO DELETED BY THE CIT(A) . THE FINDING OF THE CIT(A) WAS ALSO REMAINED UNCONTROVERTED. THEREFORE, WE CONFIRM THE FINDING OF THE LEARNED CIT(A) ON THIS ASPECT ALSO. 1 3 . IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCE OF THE CASE, IN OUR OPINION, THERE IS NO ILLEGALITY OR IRREGULARITY IN THE FINDINGS OF THE LEARNED CIT(A) . ACCORDINGLY, WE DISMISS THE APPEAL OF THE DEPARTMENT AND CONFIRM THE ORDER OF THE LEARNED CIT(A) . 1 4 . RESULTANTLY , APPEAL OF THE DEPARTMENT IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 2 ND DAY OF JAN . 2012. 201 3 SD/ - SD/ - ( ) ( D.KARUNAKAR RAO ) ( ) ( R.K.GUPTA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 02 / 01 / 201 3 . /PKM , PS COPY OF THE ORDER FORWARDED TO : ITA NO. 06 /20 10 9 1. / THE APPELLANT 2. / THE RESPON DENT. 3. / THE CIT(A) , MUMBAI / NAGPUR . 4. / CIT 5. / DR, ITAT, MUMBAI / NAGPUR . 6. GUARD FILE. //TRUE COPY// / BY ORDER, ( DY./ASSTT. REGISTRAR) / ITAT, MUMBAI
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