Shri Upendra Rai, Vapi V. The ACIT.,Vapi Circle, Vapi

ITA 62/AHD/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50897 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 27-09-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 06-01-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K PATEL
• Assessee Lawyers: KK SHAH
• Keywords: Unexplained cash credit
• Section: 44AD

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD , .!' !', #$ BEFORE SHRI MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER AND SHRI A MOHON ALANKAMONY, ACCOUNTANT MEMBER . / ITA NO.62/AHD/2009 ' % &% / ASSESSMENT YEAR:-2005-06 DATE OF HEARING:27.9.11 DRAFTED:24.10.11 SHRI UPENDRA RAI PLOT NO.3 & 7, NR. MOHID TOWER, DAMAN ROAD, CHHALA, VAPI, PAN NO.AEPR9319Q ' ' ' ' / V/S . ACIT, VAPI, CIRCLE, VAPI ()/ APPELLANT .. *+()/ RESPONDENT ()/ BY APPELLANT SHRI K.K. SHAH, AR *+() , - # / BY RESPONDENT SHRI A.K. PATEL, DR '. , $ / DATE OF HEARING 27-09-2011 /!& , $ / DATE OF PRONOUNCEMENT 31-10-2011 #0 #0 #0 #0 / // / O R D E R .!' !', #$ /PER A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER:- THIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED BY THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-VALSAD IN APPE AL NO. CIT(A)/ VLS/ 465/07-08 DATED 28-11-2008 FOR ASSESSMENT YEAR 2005 -06. THE ASSESSEE HAS RAISED FIVE GROUNDS IN HIS APPEAL, WHEREIN GROUND N O.5 IS GENERAL IN NATURE AND DOES NOT SURVIVING FOR ADJUDICATION. GROUND NO. 1 TO 4 ARE REPRODUCED HEREIN BELOW FOR ADJUDICATION:- ITA NO.62/AHD/2009 A.Y. 2005-06 UPENDRA RAI V. ACIT VAPI CIR PAGE 2 1) THE LEARNED CIT(A) GROSSLY ERRED IN CONFIRMING ADDITION OF RS.13,53,995/- IN RESPECT OF ADDITION AS UNEXPLAINE D CASH CREDIT INSTEAD OF CONTRACT AMOUNT AS PER PAGE NO. 8 OF THE CIT(A) ORDER. 2) THE LEARNED CIT(A) FURTHER ERRED IN CONFIRMING T HE ADDITION OF RS.3,71,000/- IN RESPECT OF DEPOSIT OF CASH AS UNEX PLAINED CASH CREDIT INSTEAD OF CONTRACT AMOUNT AS PER PAGE NO. 8 OF THE CIT(A) ORDER. 3) THE LEARNED CIT(A) GROSSLY ERRED IN NOT TAKING I NTO ACCOUNT 8% PROFIT AS PER PROVISIONS OF 44AD OF THE ACT ON UNACCOUNTED CONTRACT AMOUNT AS MENTIONED IN GROUND NO 1 AND 2. 4) THE LEARNED CIT(A) FURTHER ERRED IN CONFIRMING A DDITION OF RS.2,00,000/- AS UNEXPLAINED CASH CREDIT THOUGH IT WAS MERE REDEPOSIT OF CASH WITHDRAWN FROM THE BANK. 2. THE ASSESSEE IS AN INDIVIDUAL RESIDENT, FILED HI S RETURN OF INCOME FOR ASSESSMENT YEAR 2005-06 ON 23-11-2005 DECLARING TOT AL INCOME OF RS.5,61,760/-, WHICH WAS PROCESSED U/S.143(1) OF TH E INCOME-TAX ACT, 1961 (THE ACT FOR SHORT). SUBSEQUENTLY, THE CASE WAS S ELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT. ON 27-12-2007 BY MAKING AN ADDITION OF RS.75,90,845/- AS INCOME FROM UNEXPL AINED SOURCE, WHICH WAS SUBSTANTIALLY REDUCED BY THE LD. CIT(A). 3. THE APPELLANT CLAIMS TO HAVE INCOME FROM HOUSE P ROPERTY AND ALSO INCOME FROM CONSTRUCTION BUSINESS. DURING THE SCRUT INY ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO PRODUCE ACCO UNTS FOR THE FOLLOWING TWO BANK ACCOUNT (I) INDUS IND BANK A/C NO.0085-70 6371-001 IN THE NAME OF SHRI UPENDRA RAI (II) INDS IND BANK A/C 0085-660060 -050 IN THE NAME OF GANGOTRI CONSTRUCTION, THE PROPRIETARY CONCERN OF T HE ASSESSEE VIZ SHRI UPENDRA RAI. FROM THE ABOVE MENTIONED ACCOUNTS, IT WAS OBSERVED THAT AN AMOUNT OF RS.76,70,195/- WAS CREDITED IN THE BANK A CCOUNT. THE ASSESSEE CLAIMED THAT ALL THESE AMOUNTS WERE RECEIVED FROM V ARIOUS PARTIES IN LIEU OF CIVIL CONTRACT WORKS RENDERED. HOWEVER THE LD. AO W AS NOT CONVINCED WITH THE REPLY OF THE ASSESSEE AND MADE ADDITION OF THE ENTI RE AMOUNT CREDITED TO THE BANK ACCOUNT BEING RECEIPTS FROM VARIOUS PARTIES AM OUNTING TO RS. 75,90,845/- AS INCOME FROM UNDISCLOSED SOURCE BARING AN AMOUNT OF RS.79350/- SINCE ITA NO.62/AHD/2009 A.Y. 2005-06 UPENDRA RAI V. ACIT VAPI CIR PAGE 3 WITHDRAWALS FROM BANK WERE PARTLY ACCOUNTED FOR HOU SEHOLD EXPENSES AND PARTLY TO EARN RENTAL INCOME. 4. THE ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A ). THE ASSESSEE FURNISHED VARIOUS STATEMENTS AND EXPLANATION BEFORE LD. CIT(APPEALS). AFTER CONSIDERING ALL HIS SUBMISSION HE CAME TO THE FOLLO WING CONCLUSION. I HAVE CONSIDERED THE SUBMISSIONS AND GONE THROUGH THE DETAILS. IT IS SEEN THAT THE AO HAS NO OFFERED HIS COMMENTS IN THE REMAND REPORT ON THE SUBMISSION MADE BY THE APPELLANT AND THE EVIDEN CES FURNISHED. THERE IS A DEPOSIT IN THE ACCOUNT OF GANGOTRI CONST RUCTION TOTALING RS.2661950/- ON VARIOUS DATES. IT IS SEEN THAT THIS AMOUNT WAS RECEIVED FROM REGULAR BANKING CHANNELS AND FROM THE ACCOUNTS OF VARIOUS PERSONS BUT THE SAME HAS BEEN CREDIT IN THE NAME OF RAMJI RAI AND THE EXPLANATION OFFERED BY THE APPELLANT IN RESPECT OF THESE DEPOSITS APPEARS TO BE IN ORDER, IN THE ASSESSEE OF NILADEVI RAI ALSO THE SOURCE AND CREDITWORTHINESS OF THE DEPOSITOR HAS BEEN ESTA BLISHED. FURTHER, A PERUSAL OF BANK ACCOUNT SHOWS THAT CASH OF RS.37100 0/- WAS DEPOSITED IN APRIL, 2004 AND MARCH, 2005 AND CASH OF RS.2 LAC S WAS DEPOSITED ON 22.06.2004. THE APPELLANTS EXPLANATION THAT THE FI RST AMOUNT WAS RECEIVED AGAINST A CONTRACT IS NOT ACCEPTABLE AND I S ONLY AN AFTERTHOUGHT. SIMILARLY, EXPLANATION REGARDING DEPO SIT OF RS 2 LACS IS ALSO WITHOUT ANY BASIS AND CANNOT BE ACCEPTED. REGA RDING DEPOSITS OFRS.280000/- IN THE NAME OF VINOD RAI, RS.126500/- IN THE NAME OF NILU RAI AND RS.50,000/- IN THE NAME OF UPENDRA RAI HAS BEEN SATISFACTORILY EXPLAINED SINCE THESE AMOUNTS ARE RE CEIVED BY REGULAR BANKING CHANNELS. HOWEVER, I AM ALSO NOT INCLINED T O ACCEPT THE EXPLANATION REGARDING DEPOSIT IN THE NAME OF MR. X THAT T WAS A CONTRACT RECEIPT SINCE NO VIDENCE WHATSOEVER HAS BEEN FURNIS HED IN SUPPORT OF SUCH A CLAIM. THEREFXORE, I AM OF THE CONSIDERED VI EW THAT DEPOSIT OF RS.1353995/- IN THE NAME OF MR X CASH OF RS.371000/ - AND RS.200000/- ARE OUT OF UNEXPLAINED SOURCES AND ADDITION OF THES E DEPOSITS TO THE INCOME OF THE APPELLANT IS HEREBY CONFIRMED. DEPOSI TS IN THE NAMES OF OTHER PERSONS HAVE BEEN SATISFACTORILY EXPLAINED AN D THEREFORE ADDITION ON ACCOUNT OF DEPOSITS IN THE NAME OF RAMJI RAI, NI LADEVI RAI, CHUNILAL PATEL, ANKIT MIGLANI, VINOD RAI, NULU RAI, UPENDRA RAI AND MAHENDRA RAI IS DIRECTED TO BE DELETED. 5. LD. AR SUBMITTED BEFORE US PAPER BOOK CONTAININ G PAGES 1 TO 10 EXPLAINING THE NATURE OF CASH DEPOSITED IN THE BANK ACCOUNTS ALONG WITH WRITTEN SUBMISSIONS. LD. AR SUBMITTED THAT THE ASSE SSEE WAS INVOLVED IN CONSTRUCTION ACTIVITIES AND ALL THE RECEIPTS WERE F ROM CIVIL WORKS RENDERED TO ITA NO.62/AHD/2009 A.Y. 2005-06 UPENDRA RAI V. ACIT VAPI CIR PAGE 4 VARIOUS PARTIES. HE FURTHER STATED THAT THE EXPENDI TURE FOR WHICH THE PAYMENTS WERE MADE THROUGH BANK ACCOUNT WAS FOR PURCHASES OF TIMBER AND CIVIL CONSTRUCTIONAL MATERIALS. LD. AR RELIED ON THE DECI SION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF ITO V. GURUBACCHANSINGH JUNEJA (2008) 302 ITR 63 (GUJ) AND PRAYED THAT ADDITION MAY BE MADE AT 8% ON THE RECEIPTS AS PER PROVISIONS OF SECTION 44AD OF THE ACT SINCE THE APP ELLANT HAS NOT MAINTAINED BOOKS OF ACCOUNTS. LD. AR FURTHER PRAYED THAT ADDIT ION MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT TO THE EXTENT OF RS.3,71,00 0/- AND RS.2,00,000/- MAY BE DELETED BECAUSE IT WAS CONTRACT RECEIPT AND RE- DEPOSIT OUT OF CASH WITHDRAWAL FROM THE BANK RESPECTIVELY. 6. LD. DR RELIED ON THE ORDER OF LD. CIT(A) AND SUB MITTED THAT LD. CIT(A) WAS VERY JUDICIOUS IN HIS ORDER BECAUSE HE HAD CONS IDERED ALL RELEVANT MATERIALS SUBMITTED BY APPELLANT AND GRANTED SUBSTA NTIAL RELIEF TO THE ASSESSEE. HE FURTHER SUBMITTED THAT LD. CIT(A) HAS RIGHTLY MADE AN ADDITION OF RS.13,53,995/- SINCE THE AMOUNT RECEIVED FROM MR. X AND WAS NOT EXPLAINED FULLY. HE PRAYED THAT ORDER OF LD. CIT(A) MAY BE UP HELD. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORD. FROM THE FACTS BEFORE US IT IS APPARENT THA T THE ASSESSEE IS IN THE ACTIVITY OF CIVIL CONSTRUCTION AND THE SAME IS NOT DISPUTED BY REVENUE. THE ASSESSEE HAS BEEN MAKING PAYMENTS REGULARLY FOR THE PURCHASE OF MATERIALS USED IN CIVIL CONSTRUCTION FROM THE BANK ACCOUNTS. THEREFORE IT IS APPARENT THAT THE AMOUNT CREDITED IN HIS BANK ACCOUNT COULD BE TH E RECEIPT FROM THE CIVIL CONSTRUCTION ACTIVITIES CARRIED ON BY THE ASSESSEE IN THE NATURE OF TURNOVER AND NOT PROFITS FROM SUCH ACTIVITY. IN SUCH CIRCUMSTANC ES, IT WILL BE FAIR ENOUGH TO TAX THE INCOME ARRIVED OUT OF SUCH TURNOVER AND NOT THE TURNOVER AS THE INCOME. SINCE THE ASSESSEE HAS NOT MAINTAINED PROPE R BOOKS OF ACCOUNT TO ESTABLISH THE INCOME OF HIS CONSTRUCTION ACTIVITIES WE FIND IT APPROPRIATE TO ARRIVE AT AN INCOME OF 8% OF THE TURNOVER OF THE AS SESSE,E CONSIDERING THE TURNOVER OF THE ASSESSEE FROM CIVIL CONSTRUCTION AC TIVITIES TO BE RS.13,50,995/-. WE HAVES ARRIVED AT THE ABOVE DECISION INVOKING THE PROVISIONS OF SECTION ITA NO.62/AHD/2009 A.Y. 2005-06 UPENDRA RAI V. ACIT VAPI CIR PAGE 5 44AD OF THE ACT SINCE THE GROSS RECEIPTS ON CONSTRU CTION ACTIVITY OF THE ASSESSEE IS WITHIN THE PRESCRIBED LIMITS. WITH REGA RD TO THE CLAIM OF THE ASSESSEE ON CONTRACT RECEIPT OF RS. 3,71,000/- AND CASH RE-DEPOSIT IN BANK FOR RS.2,00,000/- ; WE REJECT THE CLAIM OF THE ASSESSE E SINCE THE ASSESSEE HAS NOT PRODUCED ANY PROPER EXPLANATION WITH SUFFICIENT EVIDENCE SUBSTANTIATING HIS CLAIM. 8. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLOWED . 1 #0 , /!& 2'3 31 / 10 /2011 ! $# 7 , 8. THIS ORDER PRONOUNCED IN OPEN COURT ON 31/10/ 2011 . SD/- SD/- ( , ) ( .!' !', #$ ) (MUKUL KUMAR SHAWART) A. MOHAN ALANKAMONY (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) 2'3- 31/10/2011 DKP* #0 #0 #0 #0 , ,, , *: *: *: *: ;#:& ;#:& ;#:& ;#:& / COPY OF ORDER FORWARDED TO:- 1. () / APPELLANT 2. *+() / RESPONDENT 3. = / CONCERNED CIT 4. =- / CIT (A) 5. :@8 *' , , / DR, ITAT, AHMEDABAD 6. 8% B1 / GUARD FILE. BY ORDER/ #0 #, /TRUE COPY/ C/ D ,