SHRI RAJA DAGA, JAIPUR V. INCOME TAX OFFICER, WARD-2-2, JAIPUR

ITA 612/JPR/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9951 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 04-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJENDRA SINGH JCIT DHK
• Keywords: Reopening of assessment; Peak credit; Reason to believe; Reassessment proceedings
• Section: 44AD; 143(3); 147; 148

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES A, JAIPUR JH JES'K LH 'KEKZ] YS[KK LNL; ,OA JH FOT; IKY JKO] U;KF;D LNL; DS LE{K BEFORE: SHRI RAMESH C SHARMA, AM & SHRI VIJAY PAL RAO, JM VK;DJ VIHY LA -@ ITA NO. 612/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2009-10 SHRI RAJA DAGA, 9, RAJ BHAWAN ROAD, CIVIL LINE, JAIPUR. CUKE VS. I.T.O., WARD 2(2), JAIPUR. LFKK;H YS[KK LA -@THVKBZVKJ LA-@ PAN/GIR NO.: AGTPD 0397 A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI S.L. JAIN (ADV.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI RAJENDRA SINGH (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 24/05/2019 MN?KKS 'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 30/05/2019 VKNS'K@ ORDER PER: R.C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD.CIT(A), KOTA DATED 15/03/2018 FOR THE A.Y. 2009-10 IN THE MATTER OF ORDER PASSED U/S 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED FOR REOPENING OF ASSESSMENT U/S 147 OF THE ACT AND ALSO AGAINST THE ACTION TAKEN BY THE LD. CIT(A) IN UPHOLDING THE PEAK CREDIT ADDITION OF RS. 4,34,019/- IN RESPECT OF CASH DEPOSIT IN THE BANK ACCOUNT. ITA 612/JP/2018_ RAJA DAGA VS. ITO 2 3. WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM THE RECORD THAT AS PER AIR INFORMATION AVAILABLE ON THE SYSTEM IT WAS NOTED THAT THE ASSESSEE HAD DEPOSITED CASH AND PAID RS. 37,46,736/- AGAINST CREDIT CARD BILLS FOR THE F.Y. 2008-09 RELEVANT TO A.Y. 2009-10 UNDER CONSIDERATION. FROM THE RECORD OF THE ITO, WARD 2(3), JAIPUR IT WAS NOTICED THAT THE ASSESSEE HAD NOT FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. HENCE, THE ABOVE PAYMENT AGAINST CREDIT CARD BILLS AND CASH DEPOSITED IN AXIS BANK LTD. BY THE ASSESSEE WAS NOT VERIFIABLE. THEREFORE, NOTICE U/S 148 WAS ISSUED ON 23/03/2016 BY THE ITO WARD 2(3), JAIPUR AFTER RECORDING REASONS AND TAKING PRIOR APPROVAL FROM THE PR.CIT-1, JAIPUR. 4. DURING THE COURSE OF REASSESSMENT PROCEEDINGS, THE A.O. ADDED ENTIRE AMOUNT OF CASH DEPOSITED IN THE BANK ACCOUNT AMOUNTING TO RS. 24,70,500/- ON THE PLEA THAT THE ASSESSEE COULD NOT EXPLAIN THE SOURCE OF DEPOSIT. 5. BY THE IMPUGNED ORDER, THE LD. CIT(A) UPHELD THE ADDITION OF PEAK CREDIT TO THE BANK ACCOUNT AMOUNTING TO RS. 4,34,019/- AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE ITAT. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM THE RECORD ITA 612/JP/2018_ RAJA DAGA VS. ITO 3 THAT IN SO FAR AS THE REOPENING IS CONCERNED, WE ARE SATISFIED THAT THERE WAS SUFFICIENT REASON TO BELIEVE BEFORE THE A.O. THAT THERE WAS ESCAPEMENT OF ASSESSMENT OF INCOME TO THE EXTENT OF CASH AMOUNT DEPOSITED IN BANK ACCOUNT. AFTER FOLLOWING THE PROPER PROCEDURE, THE A.O. ISSUED NOTICE U/S NO. 148 OF THE ACT AND THEREAFTER REASSESS THE INCOME OF THE ASSESSEE AFTER ADDING RS. 24,70,500/- IN RESPECT OF CASH FOUND/DEPOSITED IN THE AXIS BANK ACCOUNT. IT WAS THE CONTENTION OF THE ASSESSEE BEFORE THE LOWER AUTHORITIES THAT THE ASSESSEE WAS DOING BUSINESS OF TRADING OF WEDDING CARDS AND ALSO THE BUSINESS OF FURNISHING ANTERIOR WORK. THE BUSINESS OF WEDDING CARD WAS UNDER THE NAME OF LOVELY AGENCIES ON WHICH THE ASSESSEE HAS OFFERED 8% OF THE GROSS RECEIPT AMOUNT OF RS. 9,51,603/- THUS IN THE COMPUTATION OF INCOME FILED ALONGWITH RETURN THE ASSESSEE HAS OFFERED RS. 76,128/- U/S 44AD OF THE ACT. HOWEVER, WITH RESPECT TO ITS BUSINESS OF INTERIOR DESIGNING AND DECORATION, THE ASSESSEE HAD SHOWN PROFIT OF RS. 60,580/- UNDER THE HEAD INCOME FROM OTHER SOURCES. THE CONTENTION OF THE LD AR WAS THAT THE CASH DEPOSITED IN THE BANK ACCOUNT WAS OUT OF THE SALE PROCEEDS OF THESE BUSINESS ACTIVITIES. SO FAR AS THE BUSINESS OF TRADING OF WEDDING CARDS IS CONCERNED, WE FOUND THAT THE ASSESSEE HAS ALREADY OFFERED 8% OF THE GROSS RECEIPT U/S 44AD OF THE ACT. HOWEVER, INCOME OF RS. 44,860/- HAS BEEN OFFERED WITH RESPECT TO ITS BUSINESS OF DECORATION AND INTERIOR ITA 612/JP/2018_ RAJA DAGA VS. ITO 4 DESIGNING. IN THIS RESPECT, AS PER THE P&L ACCOUNT PLACED ON RECORD, THE ASSESSEE HAD SHOWN GROSS RECEIPT OF RS. 27,89,580/-. AS PER COMPUTATION OF INCOME, THE ASSESSEE HAD OFFERED INCOME OF RS.44,860/- ON SUCH ACTIVITY OF FURNISHING AND DECORATION. SINCE THE ASSESSEE COULD NOT PRODUCE BILLS AND VOUCHERS ETC. IN RESPECT OF THE EXPENDITURE INCURRED IN ANY OF THESE BUSINESSES, THEREFORE, THE A.O. ADDED ENTIRE AMOUNT OF CASH DEPOSITED IN THE BANK ACCOUNT, WHICH WAS RESTRICTED BY THE LD. CIT(A) TO THE PEAK CREDIT IN THE BANK ACCOUNT. 7. WE FOUND THAT THE ASSESSEE WAS A SMALL TRADER AND UNDER PRESUMPTIVE SCHEME, NOT SUPPOSED TO MAINTAIN BOOKS OF ACCOUNT. SO FAR AS THE BUSINESS OF SELLING OF WEDDING CARDS WAS CONCERNED, THE ASSESSEE HAS ALREADY OFFERED INCOME OF RS. 76,128/- BY APPLYING 8% ON THE GROSS RECEIPTS OF RS. 9,51,603/- U/S 44AD OF THE ACT. IN RESPECT OF INCOME RECEIPT ON DECORATION AND FURNISHING, THE ASSESSEE HAD SHOWN ONLY PROFIT OF RS. 44,860/- AND SINCE THE ASSESSEE HAS FAILED TO PRODUCE ANY OF THE BILLS AND EXPENDITURE INCURRED FOR SUCH BUSINESS, THE INCOME DECLARED BY THE ASSESSEE CANNOT BE ACCEPTED. 8. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FOUND THAT ENTIRE AMOUNT DEPOSITED IN THE BANK ACCOUNT WAS OUT OF THE SALE PROCEEDS OF WEDDING CARDS AND BUSINESS OF DECORATION AND FURNISHING. THUS THE ITA 612/JP/2018_ RAJA DAGA VS. ITO 5 CASH OF RS. 24,70,500/- SO DEPOSITED WAS OUT OF THE SALE PROCEEDS OF HIS BUSINESSES OF FURNISHING AND DECORATION, WHICH WAS MORE THAN THE AMOUNT OF CASH SO DEPOSITED IN THE BANK ACCOUNT. BUSINESS OF INTERIOR DECORATION CANNOT BE TREATED AS TRADING ACTIVITY SO AS TO TAKE PROFIT AT 5% OF GROSS RECEIPTS. THEREFORE, IN ALL FAIRNESS, WE DIRECT THE A.O. TO COMPUTE PROFIT @ 10% OF GROSS RECEIPT OF RS. 27,89,580/- IN RESPECT OF AMOUNT RECEIVED FROM DECORATION AND FURNISHING. THUS, THE PROFIT WORKS OUT TO BE RS. 2,78,958/-. ACCORDINGLY, WE DIRECT THE A.O. TO COMPUTE THE INCOME OF THE ASSESSEE IS AS UNDER: (I) PROFIT ON WEDDING CARD BUSINESS AS OFFERED BY THE ASSESSEE AMOUNTING TO RS. 76,128/-. (II) INCOME FROM DECORATION AND FURNISHING AMOUNTING TO RS. 2,78,958/- & (III) INTEREST INCOME AMOUNTING TO RS. 15,720/-. TOTAL AMOUNTING TO RS.3,70,806/-. IN VIEW OF THE ABOVE, WE DIRECT THE A.O. TO RESTRICT THE ADDITION TO THE ABOVE EXTENT IN PLACE OF PEAK CREDIT COMPUTED BY THE LD. CIT(A). 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH MAY, 2019. SD/- SD/- FOT; IKY JKO JES'K LH 'KEKZ (VIJAY PAL RAO) (RAMESH C SHARMA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 30 TH MAY, 2019 ITA 612/JP/2018_ RAJA DAGA VS. ITO 6 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI RAJA DAGA, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE ITO, WARD 2(2), JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 612/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR