Rajulkumar Ratilal Nena, Surendranagar V. The Income Tax Officer, Ward-1, Surendranagar

ITA 628/RJT/2012

• Counselvise Citation: 62824914 RSA 2012
• Duration Of Justice: 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 23-08-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 05-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Assessee Lawyers: DS VARIA
• Keywords: Unexplained cash credit
• Section: 143(3); 194C; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT. .. , .. , BEFORE SHRI T. K. SHARMA, JM AND SHRI D. K. SRIVAST AVA, AM ITA NO.1067/RJT/2010. ASSESSMENT YEAR -2005-06 RATISH DALABHAI RAMANI MANGAM PATEL WADI, ST.NO.3,B/HT.B.HOSPITAL, JAMNAGAR PAN:ABJPR3962L ( /APPELLANT) VS. INCOME TAX OFFICER, WARD 2(2), JAMNAGAR. /RESPONDENT !' # /ASSESSEE BY SHRI D.S.VARIA %!'# / REVENUE BY SHRI AVINASH KUMAR # & '! ( /DATE OF HEARING 02-08-2013 ) ! ( / DATE OF PRONOUNCEMENT 30-09-2013 / ORDER .. , / T. K. SHARMA, J. M THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DATED 20.5.2010 OF THE LD.CIT(A)-JAMNAGAR FOR THE ASSESSMENT YEAR 2005 -06. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL. FOR THE ASSESSMENT YEAR UNDER APPEAL, HE FILED RETURN OF IN COME DECLARING TOTAL INCOME OF RS.4,83,540/- ALONG WITH PERSONAL CAPITAL ACCOUNT AND ITS BALANCE SHEET RESPECTIVELY. THE AO FRAMED THE ASSESSMENT U /S 143(3) AT A TOTAL INCOME OF RS.21,09,226/-. IN THIS ASSESSMENT ORDER , THE AO MADE THE FOLLOWING ADDITIONS : (I) BY ESTIMATING AGRICULTURAL INCOME AT RS.1,22,585/- AS AGAINST RS.4,83,540/- DECLARED BY THE ASSESSEE AND MADE THE ADDITION OF RS.3,60,682/- (II) OLD BALANCE IN THE NAME OF M/S JYOTI INFRASTRUCTURE RS.1,20,000/- (III) OLD BALANCE BEING INVESTMENT IN BOND OF SSNNL RS.2,50,000/- (IV) CREDIT IN THE NAME OF M/S MADHAVI CONSTRUCTION CO. RS.11,9 7,000/- ----------------------- TOTAL RS.19,27,682/- ITA NO.1067/RJT/2010 RATISH DALABHAI RAMANI 2 3. ON APPEAL, THE LD. CIT(A) CONFIRMED THE AGRICUL TURAL INCOME OF RS.3,80,000/- AND DELETED THE ADDITION OF RS.8,17,0 00/- OUT OF TOTAL ADDITION OF RS.11,97,000/- BEING CREDIT ENTRY IN THE NAME OF M/ S MADHAVI CONSTRUCTION CO. APART FROM THIS, THE LD. CIT(A) ALSO DELETED THE RE MAINING ADDITION OF RS.1,20,000/- AND RS.2,50,000/-. AGGRIEVED BY THE O RDER OF THE LD. CIT(A), THE ASSESSEE IN IN APPEAL BEFORE THIS TRIBUNAL IN RES PECT OF FOLLOWING TWO ADDITIONS : (I) AGAINST THE UPHOLDING OF ADDITION OF RS.3,60 ,682/- ON ACCOUNT OF AGRICULTURAL INCOME MADE BY THE AO; AND (II) CONFIRMING THE ADDITION OF RS.3,80,000/- OUT OF RS.11,97,000/- ADDITION MADE BY THE AO U/S 68 OF THE ACT. 4. AT THE TIME OF HEARING SHRI D.S.VARIA, THE LD. C OUNSEL OF THE ASSESSEE APPEARED AND POINTED OUT THAT IN THE ASSESSMENT YE AR UNDER APPEAL, THE ASSESSEE HAS EARNED NET AGRICULTURAL INCOME OF RS. 4,83,540/- BY GROWING GROUND NUT, WHEAT, TURMERIC AND COTTON. HE FURTH ER SUBMITTED THAT IN THE COPIES OF 7/12 EXTRACT, IT IS MENTIONED THAT ONLY G ROUND NUT WERE GROWN WHICH IS NOT CORRECT AS THE ASSESSEE HAS PURCHASED THE SE EDS FOR TURMERIC AND COTTON FOR WHICH THE RELEVANT BILLS ARE AVAILABLE. HE SUBMITTED THAT HE HAS MAINTAINED COMPLETE RECORD AND ON DOUBT AND SUSPIC ION BOTH THE DEPARTMENTAL AUTHORITIES BELOW REJECTED THE DOCUMEN TARY EVIDENCE AND TREATED AGRICULTURAL INCOME TO THE EXTENT OF RS.3,80,000/- AS UNDISCLOSED INCOME U/S 68 OF THE ACT. WITH REGARD TO THE ADDITION OF RS. 3,80,000/- THE LD. COUNSEL OF THE ASSESSEE POINTED OUT THAT THIS IS NOT A CASH CR EDIT BUT THE ASSESSEE HAS RECEIVED RS.3,80,000/- FROM SUNDRY CREDITOR VIZ M/S MADHVI CONSTRUCTION CO. THE LD. COUNSEL FOR THE ASSESSEE FURTHER EXPLAINED THAT THE ASSESSEE IS ASSESSED TO TAX SINCE ASSESSMENT YEAR 1996-97 AND E ARLIER FILING RETURN OF INCOME UP TO AY 2002-03 WITH ITO 1(4)/RAJKOT. THE ASSESSE WAS A PROPRIETOR OF M/S MADHAVI ENTERPRISES WHICH WAS ENGAGED IN EXECUTING CIVIL CONTRACT AWARDED BY THE LOCAL AUTHORITIES AS WELL AS SUB-CON TRACTS FROM M/S MADHAVI CONSTRUCTION CO. HAVING PAN -AADFM3359DN AND ASSES SED TO TAX WITH ITO(1), AMRELI. IN THE FINANCIAL YEAR 2000-01 M/S MADHAVI CONSTRUCTION CO. AWARDED CIVIL CONTRACT BY THE GUJARAT FISHERIES CENTRAL CO-OP UNION LTD IN ITA NO.1067/RJT/2010 RATISH DALABHAI RAMANI 3 TURN M/S MADHAVI CONSTRUCTION CO. HAS AWARDED SUB- CONTRACT OF THE SAME CIVIL WORK TO M/S MADHAVI ENTERPRISE (OF WHICH THE ASSE SSEE WAS PROPRIETOR), THE ASSESSEE BEING PROPRIETOR OF THE M/S MADHAVI ENT ERPRISES HAS EXECUTED CIVIL WORK IN FINANCIAL YEAR 2000-01 AMOUNTING TO RS.1,37 ,12,658/-. THE MADHAVI CONSTRUCTION CO. HAS DEDUCTED TDS OF RS.2,12,148/ - U/S 194C OF THE ACT FROM RS.13,71,258/-. BEING PROPRIETOR OF M/S MADHAV I ENTERPRISES THE ASSESSEE HAS FILED THE RETURN OF INCOME FOR THE AS SESSMENT YEAR 2001-02 SHOWING TOTAL INCOME OF RS.83,740/- FROM EXECUTING SUB-CONTRACT AWARDED BY M/S MADHAVI CONSTRUCTION CO. HE ACCORDINGLY SUBM ITTED THAT IN THE ASSESSMENT YEAR UNDER APPEAL, IT RECEIVED RS.3,80, 000/- FROM SUNDRY DEBTOR I.E M/S MADHAVI CONSTRUCTION CO. WHICH CANNOT BE TR EATED AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. 5. ON THE OTHER HAND, SHRI AVINASH KUMAR, THE LD. D R VEHEMENTLY SUPPORTED THE ORDER OF THE LD. CIT(A). HE POINTED O UT THAT IN THE 7/12 EXTRACT OF THE LAND WHICH WAS SUBMITTED BY THE ASSESSEE, IN W HICH IT HAS BEEN MENTIONED BY THE ASSESSEE THAT HE IS GROWING ONLY GROUND NUT, WHEAT. IN SUCH A SITUATION, HOW SALE OF TURMERIC AND COTTONSEEDS HAS BEEN SHOWN AS AGRICULTURAL INCOME, WHEN THE ASSESSEE NEITHER GROW N COTTON NOR PAID ANY GINNING CHARGES FOR SEPARATING SHEETS FROM COTTON. TO SUM UP, THE LD. DR SUBMITTED THAT IT IS APPARENT THAT THE ASSESSEE H AD EXTRA-ORDINARILY INFLATED HIS AGRICULTURAL INCOME TO DIVERT HIS OTHERWISE TAXABLE INCOME IN THE GARB OF NON- AGRICULTURAL INCOME. 6. WITH REGARD TO THE ADDITION OF RS.3,80,000/-, T HE LD. DR POINTED OUT THAT THERE IS NO EVIDENCE ABOUT ITS SOURCES AND NATURE OF RECEIPT, THEREFORE, THE ADDITION U/S 68 HAS RIGHTLY BEEN MADE AND CONFIRMED BY THE LD. CIT(A) IN THE IMPUGNED ORDER. 7. HAVING HEARD BOTH SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IN THE IMMEDIATELY PRECEDING TW O ASSESSMENT YEARS I.E. A.Y. 2003-04 AND 2004-05, THE ASSESSEE HAS SHOWN NE T AGRICULTURAL INCOME OF ITA NO.1067/RJT/2010 RATISH DALABHAI RAMANI 4 RS.1,03,049/- AND RS.1,06,833/- RESPECTIVELY. IN TH E ASSESSMENT YEAR UNDER APPEAL, ASSESSEE CLAIMED THAT IT HAS EARNED NET AGR ICULTURAL INCOME OF RS.4,83,540/-. THE DETAILS OF GROSS INCOME, EXPENDI TURE, PERCENTAGE OF EXPENDITURE AND NET AGRICULTURAL INCOME AS SHOWN IN THIS AND PRECEDING TWO ASSESSMENT YEARS ARE AS UNDER:- COMPARATIVE FIGURES OF LAST THREE YEARS AGRICULTURA L INCOME AND EXPENDITURE : FINANCIAL YEAR INCOME EXPENDITURE % OF EXP. TO INCOME 2002-03 1,98,413 95,364 48.06% 2003-04 2,07,541 1,00,708 48.52% 2004-05 8,45,573 3,62,033 42.82% IN THE COPIES OF 7/12 EXTRACT SUBMITTED BY THE ASSE SSEE, IT IS MENTIONED THAT ONLY GROUNDNUT WERE GROWN WHEREAS ASSESSEE HAS SHOW N SALE PROCEEDS WHICH INCLUDE SALE PROCEEDS OF COTTON OF TURMERIC A ND COTTON. IT IS UNBELIEVABLE THAT ASSESSEE HAS PRODUCED TURMERIC AND COTTON AS T HESE TWO ITEMS ARE NOT MENTIONED IN 7/12 EXTRACTS SUBMITTED BY THE ASSESSE E. IN CASE THERE WAS SOME MISTAKE IN 7/12 EXTRACTS, THE ASSESSEE SHOULD HAVE POINTED OUT THE SAME TO THE CONCERNED AUTHORITY. NO SUCH MISTAKE WA S POINTED OUT TO THE CONCERNED AUTHORITY. BE THAT IT MAY BE, LOOKING TO THE NET AGRICULTURAL INCOME OF RS.1,03,,49/- AND RS.1,06,833/- SHOWN BY THE ASSESS EE FOR THE FINANCIAL YEAR 2002-03 AND 2003-04 THE NET AGRICULTURAL INCOME AT RS.1,22,858/- ESTIMATED BY THE AO IN THE ASSESSMENT YEAR UNDER APPEAL IS FAIR AND REASONABLE. WE THEREFORE DECLINED TO INTERFERE. GROUND NO.1 IS REJ ECTED. 8. WITH REGARD TO GROUND NO.2, IT IS PERTINENT TO N OTE THAT AO FRAMED ASSESSMENT U/S.143(3), R.W.S.144A OF THE I.T. ACT. THE ASSESSEE FILED WRITTEN SUBMISSIONS ALONG WITH DOCUMENTARY EVIDENCES DURING THE COURSE OF HEARING U/S.144A WHICH ARE REPRODUCED BY LD. CIT (A) IN PAR A-6 OF THE IMPUGNED ORDER. IT IS PERTINENT TO NOTE THAT NO BANK STATEMENT OF M /S. MADHAVI CONSTRUCTION CO. WAS FILED DESPITE SEVEN HEARINGS ALLOWED OVER PERIO D OF FIVE MONTHS. SINCE THIS WAS NEW BUSINESS, THE LD. CIT (A) FORWARDED THE SAM E TO THE AO, WHO ACCEPTED THAT OUT OF TOTAL DEPOSIT OF RS.11,97,000/ -, AMOUNT OF RS.8,17,000/- WAS EXPLAINED, BUT THE REMAINING AMOUNT OF RS.3,80, 000/- WHICH WAS DEPOSITED ON 30-06-2004 REMAINED UNEXPLAINED IN AB SENCE OF ANY EVIDENCE. ITA NO.1067/RJT/2010 RATISH DALABHAI RAMANI 5 IN THE COUNTER COMMENTS THE ASSESSEE ONLY EXPLAINED THIS AMOUNT OF RS.3,80,000/- WAS RECEIVED PRIOR TO THE AMOUNT OF R S.8,17,000/- AND THE SAME MIGHT BE OUT OF RELEASEMENT OF SECURITY DEPOSIT BUT NO EVIDENCE IN SUPPORT OF THIS FACT WAS FURNISHED EITHER BEFORE THE LD. CIT ( A) OR EVEN BEFORE US. IN THE ABSENCE OF EVIDENCE OF SOURCE AND NATURE OF RECEIPT OF RS.3,80,000/-, THIS ADDITION WAS RIGHTLY UPHELD BY LD. CIT (A). WE THER EFORE, DECLINED TO INTERFERE. GROUND NO.2 IS ALSO REJECTED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. THIS ORDER IS PRONOUNCED IN THE OPEN COURT ON THE D ATE MENTIONED HEREINABOVE. SD/- SD/- ( *++,% / D. K. SRIVASTAVA) ( ++-. / T. K. SHARMA) (#/% / ACCOUNTANT MEMBER #/% /JUDICIAL MEMBER /-0/1 ORDER DATE 30.09.2013 /RAJKOT SRL/NVA !'# $%'& / COPY OF ORDER FORWARDED TO:- 2+ / APPELLANT- RATISH DALABHAI RAMANI, MANGAM PA TEL WADI, ST.NO.3,B/HT.B.HOSPITAL, JAMNAGAR 3+ / RESPONDENT- INCOME TAX OFFICER, WARD 2(2), JAMNA GAR. 4+#151 & 6 / CONCERNED CIT, JAMNAGAR. 7+ & 6 8 / CIT (A), JAMNAGAR. 9+:;< / DR, ITAT, RAJKOT =+<*>? / GUARD FILE. /-# / BY ORDER TRUE COPY. PRIVATE SECRETA RY INCOME TAX APPELLATE TRIBUNAL, RAJKOT