PARMANAND, Kota V. ACIT, Kota

ITA 659/JPR/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4901 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 16-07-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA CIT DR DHK
• Keywords: Sale consideration of property below Jantri Value; Business income; Depreciation; Valuation report; Commercial expediency
• Section: 143(3); 50C; 28

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES , JAIPUR JH HKKXPUN] YS[KK LNL; ,O JH DQY HKKJR] U;KF;D L NL; DS LE{K BEFORE: SHRI BHAGCHAND, AM & SHRI KUL BHAR AT, JM VK;DJ VIHY LA-@ ITA NO. 659/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 SHRI PARMANAND PROP. M/S. PARMANAND CONTRACTOR H.NO. 19, RANGBARI, KOTA CUKE VS. THE ACIT CIRCLE- 1 KOTA LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ABZPP 5832 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 673/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 THE ACIT CIRCLE- 1 KOTA CUKE VS. SHRI PARMANAND PROP. M/S. PARMANAND CONTRACTOR H.NO. 19, RANGBARI, KOTA LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ABZPP 5832 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 217/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11 SHRI PARMANAND PROP. M/S. PARMANAND CONTRACTOR H.NO. 19, RANGBARI, KOTA CUKE VS. THE ACIT CIRCLE- 1 KOTA LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ABZPP 5832 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI NIKHLESH KATARIA, CA JKTLO DH VKSJ LS@ REVENUE BY :SHRI R.A. VERMA, ADDL.CIT- DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 24/11/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 30/11/2016 ITA NO. 659/JP/2013 SHRI PARMANAND VS. ACIT , CIRCLE- 1, KOTA . 2 VKNS'K@ ORDER PER KUL BHARAT, JM THESE ARE THE THREE APPEALS FILED BY THE ASSESSEE A ND REVENUE PERTAINING TO ASSESSMENT YEARS 2009-10 AND 2010-11 AGAINST TWO SEPARATE ORDERS OF THE LD. CIT(A), KOTA DATED 31-05-2013 AND 17-12-2014 RESPECTIVELY. FOR THE SAKE OF CONVENIENCE AND BREVI TY, THESE APPEALS ARE BEING DISPOSED OFF THROUGH A COMMON ORDER. 2.1 FIRST OF ALL, WE TAKE UP THE CROSS APPEALS FOR THE ASSESSMENT YEAR 2009-10 WHEREIN THE GROUNDS RAISED BY THE ASSESSEE AND REVENUE ARE AS UNDER:- A.Y. 659/JP/2014 ASSESSEE -A.Y. 2009-10 1. THAT THE LOWER AUTHORITIES HAVE ERRED IN LAW AN D ON THE FACTS IN REJECTING THE BOOKS OF ACCOUNT U/S 145(3) OF THE I.T. ACT. 2. THAT THE LD. CIT(A) GROSSLY ERRED IN LOWER AUTHO RITIES AND ON THE FACTS IN DIRECTING TO APPLY NET PROFIT RATE @ 9 .75% ON CONTRACT RECEIPTS OF THE ASSESSEE SUBJECT TO INTEREST & DEPR ECIATION BUT SUBJECT TO INCOME DECLARED BY THE ASSESSEE 3. THAT THE LOWER AUTHORITIES GROSSLY ERRED IN LAW AND ON THE FACTS IN TREATING THE GROSS INTEREST RECEIVED ON FD R & NSC OF RS. 29,29,387/- AS INCOME FROM OTHER SOURCES INSTEAD OF BUSINESS RECEIPTS. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) GROSSLY ERRED IN DISALLOWING A SUM OF RS. 1, 37,870/- ON ITA NO. 659/JP/2013 SHRI PARMANAND VS. ACIT , CIRCLE- 1, KOTA . 3 ACCOUNT OF SALES AND ADMINISTRATIVE EXPENSES INCUR RED AT THE PETROL PUMPS OF THE ASSESSEE. AY. 673/JP/2013 REVENUE -A.Y. 2009-10 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED IN:- (I) DIRECTING TO ALLOW DEPRECIATION AND INTEREST OU T OF NET PROFIT RATE ADOPTED AT 9.75% ON THE GROSS CO NTRACT RECEIPTS WHEN THE SAME HAVE BEEN CLAIMED AS PER THE PROFIT AND LOSS ACCOUNT AND ALREADY ALLOWED IN THE COMPUTA TION OF INCOME, AS PER THE ASSESSMENT ORDER. (II) DELETING THE TRADING ADDITION OF RS. 1,40,660/ - IN THE PETROL PUMP ACCOUNT MADE BY THE AO BY APPLYING THE GROSS PROFIT RATE OF 1.67% BY FOLLOWING COMPARABLE CASE OF SHRI OM PRAKASH SHARMA (III) RESTRICTING THE DISALLOWANCE OUT OF SALES AND ADMINISTRATIVE EXPENSES TO 10% AS AGAINST MADE BY T HE AO AT 20% WITHOUT GIVING ANY VALID AND JUSTIFIABLE REA SONS. (IV) DELETING THE ADDITION OF RS. 2,44,645/- U/S 69 B WITHOUT MAKING ANY REFERENCE TO THE VALUATION OFFIC ERS VALUATION REPORT DATED 18-12-2008. (V) DELETING THE ADDITION OF RS. 78,53,000/-ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS INTO THE BANK ACCOUNT WITHOUT APPRECIATING THE FACT THAT TRANSACTION DATE AS PER THE AIR INFORMATION IS 31-03-2009 FALLING WITHIN THE FI NANCIAL YEAR 2008-09. 3.1 THE GROUND NO. 1 AND 2 OF THE ASSESSEE ARE PERT AINING TO REJECTION OF BOOKS OF ACCOUNT AND CONFIRMING THE ADDITION BY APPLYING NET PROFIT RATE AT 9.75% SUBJECT TO INTEREST AND DEPRECIATION AND SUBJECT TO INCOME ITA NO. 659/JP/2013 SHRI PARMANAND VS. ACIT , CIRCLE- 1, KOTA . 4 DECLARED BY THE ASSESSEE. BRIEFLY STATED THE FACTS ARE THAT CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND ASSESSMENT U/S 143(3) OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) WAS FRAMED BY THE AO VIDE ORDER DATED 30-12-2011. WHILE FRAMIN G THE ASSESSMENT, THE AO REJECTED THE BOOKS OF ACCOUNT AND ESTIMATED THE NET PROFIT RATE AT 9.75% GIVING THE BENEFIT OF DEPRECIATION BUT WITHOU T GIVING BENEFIT OF INTEREST. THE AO ALSO MADE ADDITION IN RESPECT OF I NCOME FROM OTHER SOURCES AND DISALLOWANCE OF SALES AND ADMINISTRATIV E EXPENSES AND G.P. ADDITION IN THE PETROL PUMP BUSINESS. 3.2 AGGRIEVED BY THE AOS ORDER, THE ASSESSEE PREFE RRED APPEAL BEFORE THE LD. CIT(A) WHO UPHELD THE FINDINGS OF THE AO IN RESPECT OF REJECTION OF BOOKS OF ACCOUNT. HOWEVER, THE LD. CIT(A) MODIFI ED THE FINDING WITH REGARD TO ESTIMATION OF PROFIT OF NET PROFIT RATE. THUS THE LD. CIT(A) MODIFIED THE ORDER BY DIRECTING THE AO TO ADOPT NET PROFIT RATE @ 9.75% SUBJECT TO DEPRECIATION AND INTEREST AND ALSO MADE THE ADDITION SUBJECT TO INCOME DECLARED BY THE ASSESSEE. 3.3 THE ASSESSEE AND REVENUE BOTH HAVE CHALLENGED T HESE FINDINGS OF THE LD. CIT(A) BY FILING THE SEPARATE APPEALS. ITA NO. 659/JP/2013 SHRI PARMANAND VS. ACIT , CIRCLE- 1, KOTA . 5 3.4 IN THE PRESENT APPEAL, THE ASSESSEE CHALLENGED THE FINDINGS OF THE LD. CIT(A) FOR MAKING BENEFIT OF DEPRECIATION AND INTEREST SUBJECT TO INCOME DECLARED BY THE ASSESSEE. 3.5 THE LD. COUNSEL FOR THE ASSESSEE REITERATED HI S SUBMISSIONS AS MADE IN THE WRITTEN SUBMISSION AND SUBMITTED THAT T HE LD. CIT(A) WAS NOT JUSTIFIED IN SUBJECTING THE BENEFIT OF THE DEPRECIA TION AND INTEREST TO THE INCOME DECLARED BY THE ASSESSEE. THE LD. COUNSEL FO R THE ASSESSEE SUBMITTED THAT SIMILAR ADDITION WAS ALSO MADE IN EA RLIER YEAR AND THE MATTER TRAVELED UPTO THIS TRIBUNAL IN ITA NO. 524 & 525/JP/2010 PERTAINING TO ASSESSMENT YEAR 2005-06 AND 2007-08. THE COORDINATE BENCH WAS PLEASED TO UPHOLD THE NET PROFIT RATE OF 9.75% SUBJECT TO DEPRECIATION AND INTEREST. HE SUBMITTED THAT FACTS ARE IDENTICAL IN THIS CASE AND THE ISSUE IS SQUARELY COVERED BY THE DECISION OF JAIPUR BENCH. 3.6 ON THE CONTRARY, THE LD. DR HAS OPPOSED THE SUB MISSION OF THE LD. COUNSEL FOR THE ASSESSEE AND SUPPORTED THE ORDERS O F THE AUTHORITIES BELOW. 3.7 WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE TH ROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE COORDINATE BENCH IN PARA HAS DECIDED THE SIMILAR ISSUE AS UNDER:- ITA NO. 659/JP/2013 SHRI PARMANAND VS. ACIT , CIRCLE- 1, KOTA . 6 9. CONSIDERING THE FACT THAT TRIBUNAL FOR BOTH TH E PRECEDING AND SUCCEEDING ASSESSMENT YEARS HAS UPHEL D THE NET PROFIT RATE OF 9.75% SUBJECT TO DEPRECIATION AN D INTEREST AND THE REVENUE HAS NOT FILED APPEALS AGAINST ORDER OF LD. CIT(A) FOR ASSESSMENT YEAR 2004-05 AND 06-07, WE FE EL THAT LD. CIT(A) WAS JUSTIFIED IN DIRECTING TO APPLY A NE T PROFIT RATE OF 9.75% SUBJECT TO DEPRECIATION AND INTEREST.. THE LD. CIT(A) HAS NOT GIVEN ANY FINDING AS TO HOW THE FACTS IN THE PRESENT CASE ARE DIFFERENT. THEREFORE, WE MODIFY TH E ORDER. RESPECTFULLY FOLLOWING THE DECISION OF COORDINATE BENCH (SUPRA), WE MODIFY THE ORDER OF THE LD. CIT(A) ON THIS ISSUE WITH THE DIRECTION TO THE AO TO APPLY THE NET PROFIT RATE OF 9.75% SUBJECT TO DEPRECIATION AN D INTEREST. 3.8 APROPOS REJECTION OF BOOKS OF ACCOUNT, IT WAS S UBMITTED THAT COORDINATE BENCH HAS BEEN TAKING CONSISTENT VIEW TH AT INTEREST AND DEPRECIATION IS TO BE ALLOWED FOR APPLICATION FOR N ET PROFIT RATE. THEREFORE, THE REJECTION OF BOOKS OF ACCOUNT IS UPHELD. THE GR OUND RAISED IN RESPECT OF REJECTION OF BOOKS OF ACCOUNT IS DISMISSED. THU S GROUND NO. 1 OF THE ASSESSEE IS DISMISSED AND GROUND NO. 2 OF THE ASSES SEE IS PARTLY ALLOWED AS DISCUSSED HEREINABOVE. 4.1 GROUND NO. 3 OF THE ASSESSEE IS AGAINST CONFIRMING THE ADDITION IN RESPECT OF INTEREST ON FDR & NSC OF RS. 29,29,387/ - AS INCOME FROM OTHER SOURCES INSTEAD OF BUSINESS RECEIPTS. ITA NO. 659/JP/2013 SHRI PARMANAND VS. ACIT , CIRCLE- 1, KOTA . 7 4.2 THE LD. COUNSEL FOR THE ASSESSEE REITERATED TH E SUBMISSIONS AS MADE IN THE WRITTEN BRIEF AND SUBMITTED THAT THE AU THORITIES BELOW FAILED TO APPRECIATE THE FACTS THAT FDR AND NSC WERE MADE FOR FURNISHING THE PERFORMANCE GUARANTEE BY THE BANKER. THEREFORE, ANY INCOME ACCRUED THEREON WAS ESSENTIALLY A BUSINESS INCOME. 4.3 ON THE CONTRARY, THE LD. DR SUPPORTED THE ORDER OF THE AO AND SUBMITTED THAT THERE IS NO LEGALITY INTO THE ORDER OF THE LD. CIT(A). 4.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE TH ROUGH THE ORDERS OF THE AUTHORITIES BELOW. DURING THE COURSE OF HEARING , A QUERY WAS RAISED TO LD. COUNSEL FOR THE ASSESSEE TO DEMONSTRATE FROM TH E CONTRACT WHETHER SUCH FDRS WERE MADE FOR GETTING THE PERFORMANCE GUA RANTEE FROM ITS BANKER. THE LD. COUNSEL FOR THE ASSESSEE COULD NOT POINT OUT FROM THE RECORD. HOWEVER, HE SUBMITTED THAT REQUISITE EVIDEN CE WAS PLACED BEFORE THE AO. IN THE ABSENCE OF THE CONTRACT, IT CANNOT B E INFERRED THAT THE FDRS WERE MADE BY THE ASSESSEE WAS OUT OF COMMERCIAL EXP EDIENCY. WE, THEREFORE, DEEM IT IN THE INTEREST OF JUSTICE TO RE STORE THIS ISSUE TO THE FILE OF THE AO TO VERIFY WHETHER THE FDRS RECEIPTS MADE BY THE ASSESSEE WERE OUT OF COMMERCIAL EXPEDIENCY. THE AO OBSERVED THAT THE ASSESSEE WAS REQUIRED TO MAKE THE FDRS WITH THE BANKER FOR G ETTING THE PERFORMANCE GUARANTEE/ BANK GUARANTEE AS TO THE CON TRACT EXECUTED BY THE ITA NO. 659/JP/2013 SHRI PARMANAND VS. ACIT , CIRCLE- 1, KOTA . 8 ASSESSEE. THUS, HE WOULD TREAT INTEREST AS INCOME F ROM BUSINESS RECEIPT, IF THE ASSESSEE FAILS TO ESTABLISH THE NEXUS BETWEEN T HE CONTRACT AND THE FDRS, IN THAT EVENT, NO RELIEF WOULD BE GRANTED. T HUS GROUND NO. 3 OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 5.1 THE GROUND NO. 4 OF THE ASSESSEE IS AGAINST CON FIRMING THE DISALLOWANCE OF RS. 1,37,870/- ON ACCOUNT OF SALES AND ADMINISTRATIVE EXPENSES INCURRED AT THE PETROL PUMP OF THE ASSESSE E. 5.2 THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS MADE IN THE BRIEF NOTE. THE LD. COUNSEL FOR THE ASSESSEE STATED THAT ONLY EXPENSES ARE VERIFIABLE FROM THE BOOKS OF ACCOUNT M AINTAINED BY THE ASSESSEE. HE FURTHER SUBMITTED THAT THE EXPENSES AR E TO THE TUNE OF 0.73% AND 0.59% OF THE TOTAL TURNOVER OF THE ASSESSEE. 5.3 THE LD. DR RELIED ON THE ORDERS OF THE AO. 5.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE TH ROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS NOTED FROM THE ASSESSM ENT ORDER THAT THE ASSESSEE HAD DEBITED THE FOLLOWING SALES AND ADMINI STRATIVE EXPENSES FROM ITS TWO PETROL PUMPS. (I) PIPALIAY FILLING STATION RS. 10,08,674/- (II) SUKET FILING STATION RS. 3,70,026/- TOTAL RS. 13,78,700/- ITA NO. 659/JP/2013 SHRI PARMANAND VS. ACIT , CIRCLE- 1, KOTA . 9 THE AO DID NOT PRODUCE THE RELEVANT BILLS AND VOUCH ERS AS TO THE ABOVE SALES AND ADMINISTRATIVE EXPENSES. HENCE, THE AO DI SALLOWED 20% OF TOTAL EXPENSES OF RS. 13,78,700/- WHICH COMES TO RS . 2,75,740/-. BEFORE THE LD. CIT(A), THE ISSUE WAS RAISED WHO OBSERVED T HAT THE EXPENSES ARE NOT FULLY VERIFIABLE BUT SOME DISALLOWANCES WERE CO NSIDERED BY HIM JUSTIFIED AND THE LD. CIT(A) THUS DISALLOWED THE EX PENSES TO THE EXTENT OF RS. 1,37,870/- . HENCE IN VIEW OF THE ABOVE FACTS A ND CIRCUMSTANCES, WE CONCUR WITH THE FINDING OF THE LD. CIT(A) ON THIS I SSUE. THUS GROUND NO. 4 OF THE ASSESSEE IS DISMISSED. 6.1 NOW WE COME TO THE APPEAL OF THE REVENUE IN ITA NO. 673/JP/2013 FOR THE ASSESSMENT YEAR 2009-10. 7.1 THE GROUND NO. 1 OF THE REVENUE IS AGAINST DIRE CTING TO ALLOW DEPRECIATION AND INTEREST OUT OF NET PROFIT RATE AD OPTED AT 9.75% . AFTER HEARING BOTH THE PARTIED AND PERUSING THE MATERIALS AVAILABLE ON RECORD, IT IS NOTED THAT ASSESSEE AS WELL AS REVENUE HAVE CHAL LENGED THE FINDINGS OF THE LD. CIT(A). THIS ISSUE HAS BEEN DEALT WITH IN I TA NO. 659/JP/13 OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2009-10. IN VIEW O F OUR DECISION IN ITA NO. 659/JP/2013, WE DO NOT SEE ANY MERIT IN THE CON TENTION OF THE REVENUE. THUS GROUND NO. 1 OF THE REVENUE IS DISMIS SED. ITA NO. 659/JP/2013 SHRI PARMANAND VS. ACIT , CIRCLE- 1, KOTA . 10 8.1. THE GROUND NO. 2 OF THE REVENUE IS AGAINST DEL ETION THE TRADING ADDITION OF RS. 1,40,660/- IN THE PETROL PUMP ACCOU NT MADE BY THE AO BY APPLYING GROSS PROFIT RATE OF 1.67%. 8.2 DURING THE COURSE OF HEARING, THE LD. DR SUPPOR TED THE ORDER OF THE AO. 8.3 ON THE CONTRARY, THE LD. COUNSEL FOR THE ASSESS EE SUPPORTED THE ORDER OF THE LD. CIT(A). 8.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE TH ROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE LD. CIT(A) HAS ESTIMATED THE DISALLOWANCE @ 10% WHICH APPEARS TO BE REASONABLE. THEREFORE, THE GROUND NO. 2 OF THE REVENUE IS DISMISSED. 9.1 THE GROUND NO. 3 OF THE REVENUE IS AGAINST REST RICTING THE ALLOWANCE OUT OF SALES AND ADMINISTRATIVE EXPENSES TO 10% AS AGAINST MADE BY THE AO AT 10%. IT IS NOTED THAT THIS ISSUE HAS ALREADY BEEN DEALT WITH IN ITA NO. 659/JP/2013 IN ASSESSEE'S OWN CASE WHEREIN THE ACTION OF THE LD. CIT(A) HAS BEEN CONFIRMED. HENCE, WE FIND N O INFIRMITY IN THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. THUS GROUND NO. 3 OF THE REVENUE IS DISMISSED. ITA NO. 659/JP/2013 SHRI PARMANAND VS. ACIT , CIRCLE- 1, KOTA . 11 10.1 THE GROUND NO. 4 OF THE REVENUE IS AGAINST DEL ETING THE ADDITION OF RS. 2,44,645/- U/S 69B OF THE ACT WITHOUT MAKING ANY REFERENCE TO THE VALUATION OFFICERS VALUATION REPORT DATED 18-12-20 08. 10.2 DURING THE COURSE OF HEARING, THE LD. DR SUPPO RTED THE ORDER OF THE AO AND SUBMITTED THAT THE LD. CIT(A) WAS NOT JUSTIF IED IN DELETING THE ADDITION. 10.3 ON THE CONTRARY, THE LD. COUNSEL FOR THE ASSES SEE SUPPORTED THE ORDER OF THE LD. CIT(A). 10.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE T HROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE LD. CIT(A) HAS DELETED THE ADDITION BY OBSERVING AS UNDER:- 4.6.2 I HAVE VERIFIED THE DETAILS AND THE CONTENTION OF THE ASSESSEE WAS FOUND TO BE CORRECT. THE ASSESSING OFFICER IS THEREFORE, DIRECTED TO DELETE THE ADDITION OF RS. 2,44,645/-. THIS GROUND OF APPEAL IS THEREFO RE, ALLOWED. THE AO HAS MADE THIS ADDITION ON THE GROUND THAT TH E ASSESSEE WAS REQUIRED TO FURNISH THE DETAILS OF EXPENDITURE INCU RRED FOR BUILDING CONSTRUCTION DURING THE YEAR UNDER CONSIDERATION. T HE AO OBSERVED THAT THE CASE OF THE ASSESSEE HAS BEEN REFERRED TO THE V ALUATION CELL IN THE PRECEDING YEAR. THE VALUATION OFFICER FOR THE YEAR UNDER CONSIDERATION ITA NO. 659/JP/2013 SHRI PARMANAND VS. ACIT , CIRCLE- 1, KOTA . 12 HAS DETERMINED THE VALUE AT RS. 8,44,645/- AS AGAIN ST RS. 6,00,000/- DECLARED BY THE ASSESSEE. WE FIND THAT THE ORDER OF THE LD. CIT(A) IS CRYPTIC AND NON-SPEAKING. THEREFORE, THE ORDER OF T HE LD. CIT(A) IS SET ASIDE AND THE FINDING OF THE AO IS UPHELD. THUS GR OUND NO. 4 OF THE REVENUE IS ALLOWED. 11.1 THE GROUND NO. 5 OF THE REVENUE IS REGARDING D ELETION OF ADDITION OF RS. 78,53,000/- ON ACCOUNT OF UNEXPLAINED CASH DEPOSIT INTO THE BANK WITHOUT APPRECIATING THE FACT THAT TRANSACTION DATE 31-03-2009 AS PER AIR INFORMATION IS FALLING WITHIN THE FINANCIAL YEAR 20 08-09. 11.2 DURING THE COURSE OF HEARING, THE LD. DR SUPPO RTED THE ORDER OF THE AO. 11.3 ON THE CONTRARY, THE LD. COUNSEL FOR THE ASSES SEE SUBMITTED THAT THE AO HAS WRONGLY MADE THE ADDITION. THE LD. COUNSEL F OR THE ASSESSEE RELIED ON THE SUBMISSION PLACED BEFORE THE LD. CIT( A). THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO PAGE 14 AND 15 O F THE PAPER BOOK AND SUBMITTED THAT NO SUCH DEPOSIT WAS MADE BY THE ASSE SSEE. THE BANK HAS CERTIFIED THAT THE ASSESSEE IS NOT MAINTAINING ANY BANK ACCOUNT EXCEPT THREE BANK ACCOUNTS AS PROVIDED TO THE AO. ITA NO. 659/JP/2013 SHRI PARMANAND VS. ACIT , CIRCLE- 1, KOTA . 13 11.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE T HROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE LD. CIT(A) HAS GIVEN A FINDING IN PARA 4.72 AS UNDER:- 4.7.2 I HAVE VERIFIED THE DETAILS AND IT WAS SEEN THAT INFORMATION RELATED TO A.Y. 2010-11 [F.Y. 2009 -10] (COPY OF INFORMATION IS PLACED AS ANNEXURE A). THE ASSESSING OFFICER IS THEREFORE, DIRECTED TO DELETE THE ADDITION OF RS. 78,53,000/-. THIS GROUND OF APPEAL IS THEREF ORE, ALLOWED. AS PER ABOVE FINDING, THE TRANSACTION IS REPORTED T O BE PERTAINING TO A.Y. 2010-11. THIS FACT IS NOT REBUTTED BY THE REVENUE. THE LD. DR INSISTED THAT FINDINGS OF THE LD. CIT(A) MAY BE MODIFIED TO THE EXTENT OF THAT THE AO WOULD BE AT LIBERTY TO VERIFY CLAIM OF THE ASSES SEE IN RELEVANT ASSESSMENT YEAR. WE THEREFORE, MODIFY THE FINDINGS OF THE LD. CIT(A) TO THE EXTENT THAT THE AO WOULD BE AT LIBERTY TO VERIF Y THE CLAIM OF THE ASSESSEE IN THE RELEVANT ASSESSMENT YEAR. THUS GROU ND NO. 5 OF THE REVENUE IS DISPOSED OFF IN TERMS OF THE ABOVE DIRE CTION. 12.1 NOW WE TAKE UP THE APPEAL OF THE ASSESSEE IN I TA NO. 217/JP/2015 FOR THE ASSESSMENT YEAR 2010-11 WHEREIN THE ASSESSE E HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. ITA NO. 659/JP/2013 SHRI PARMANAND VS. ACIT , CIRCLE- 1, KOTA . 14 1. THE LD. CIT(A) ERRED IN LAW AS WELL AS ON THE FACTS OF THE PRESENT CASE IN SUSTAINING THE REJECTION OF BOO KS OF ACCOUNT OF THE ASSESSEE AND ALSO SUSTAINING NET PRO FIT RATE OF 5% WITHOUT ALLOWING INTEREST AND DEPRECIATION. 2. THE LD. CIT(A) ERRED IN LAW AS WELL AS ON THE FA CTS OF THE PRESENT CASE IN SUSTAINING OF ASSESSMENT OF THE INTEREST INCOME AS INCOME FROM OTHER SOURCES INSTEAD OF BUSI NESS INCOME AS DECLARED BY THE ASSESSEE. 3. WITHOUT PREJUDICE TO ABOVE, THE LD. CIT(A) ERRED IN LAW AS WELL AS ON THE FACTS OF THE PRESENT CASE IN NOT ALLOWING SET OFF OF INTEREST EXPENSES OUT OF INTEREST INCOME . 4. THE LD. CIT(A) ERRED IN LAW AS WELL AS ON THE FA CTS OF THE PRESET CASE IN SUSTAINING TREATMENT OF THE SALE S TAX REFUND AMOUNTING TO RS. 1,89,225/- AS INCOME FROM OTHER SO URCES AS AGAINST BUSINESS INCOME. (MODIFIED GROUND VIDE LET TER DATED 21-04-2016 AS UNDER:- THE LD. CIT(A) ERRED IN LAW AS WELL AS ON THE FAC TS OF THE PRESENT CASE IN DIRECTING TO ASSESS THE SALES T AX REFUND SEPARATELY UNDER THE HEAD OF INCOME FROM BUSINESS A S REMISSION OF LIABILITY U/S 41(1). 13.1 BRIEFLY STATED THE FACTS THAT THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND ASSESSMENT U/S 143(3) OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) WAS FRAMED BY TH E AO VIDE ORDER DATED - 06-03-2013. WHILE FRAMING THE ASSESSMENT, THE AO MA DE TRADING ADDITION BY REJECTING THE BOOKS OF ACCOUNT AND APPLYING THE NET PROFIT RATE AT 9.75% AND ALSO MADE ADDITION IN RESPECT OF INTERES T RECEIPTS AS INCOME FORM OTHER SOURCES AT RS. 25,47,588/-. THE AO MADE ADDITION ON ACCOUNT ITA NO. 659/JP/2013 SHRI PARMANAND VS. ACIT , CIRCLE- 1, KOTA . 15 OF SALES TAX REFUND OF RS. 27,45,073/- ON THE TURN OVER. THE AO ALSO MADE ADDITION IN THE PETROL PUMP BUSINESS BY ADOPTING TH E NET PROFIT RATE AT 0.55% RESULTING INTO AN ADDITION OF RS. 1,44,193/-. THE AO ALSO MADE ADDITION OF RS. 1,44,193/- BY INVOKING THE PROVISIO N OF SECTION 50C OF THE ACT. 13.2 AGGRIEVED, THE ASSESSEE PREFERRED THE APPEAL B EFORE THE LD. CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESS EE IN RESPECT OF TRADING ADDITION DIRECTED THE AO TO ADOPT THE NET P ROFIT RATE AT 5% ON THE TURNOVER AS AGAINST THE NET PROFIT RATE ADOPTED BY THE AO AT 9.75%. 13.3 AFTER HEARING BOTH THE PARTIES AND PERUSING TH E MATERIALS AVAILABLE ON RECORD, WE FIND THAT THIS ISSUE HAS ALREADY BEEN DECIDE BY US IN ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEAR 2009-10 (SUPRA) WHEREIN THE DECISION OF COORDINATE BENCH HAS BEEN FOLLOWED AS U NDER:- 9. CONSIDERING THE FACT THAT TRIBUNAL FOR BOTH TH E PRECEDING AND SUCCEEDING ASSESSMENT YEARS HAS UPHEL D THE NET PROFIT RATE OF 9.75% SUBJECT TO DEPRECIATION AN D INTEREST AND THE REVENUE HAS NOT FILED APPEALS AGAINST ORDER OF LD. CIT(A) FOR ASSESSMENT YEAR 2004-05 AND 06-07, WE FE EL THAT LD. CIT(A) WAS JUSTIFIED IN DIRECTING TO APPLY A NE T PROFIT RATE OF 9.75% SUBJECT TO DEPRECIATION AND INTEREST.. HENCE THE DECISION TAKEN IN THE APPEAL OF THE ASSES SEE FOR ASSESSMENT YEAR 2009-10 SHALL APPLY MUTATIS MUTANDIS IN THE AS SESSMENT YEAR 2010- ITA NO. 659/JP/2013 SHRI PARMANAND VS. ACIT , CIRCLE- 1, KOTA . 16 11 IN ASSESSEE'S APPEAL. THUS GROUND NO. 1 OF THE A SSESSEE IS PARTLY ALLOWED. 14.1 THE GRIEVANCE OF THE ASSESSEE IN GROUND NO. 2 AND 3 IS AS UNDER:- 2. THE LD. CIT(A) ERRED IN LAW AS WELL AS ON THE FA CTS OF THE PRESENT CASE IN SUSTAINING OF ASSESSMENT OF THE INTEREST INCOME AS INCOME FROM OTHER SOURCES INSTEAD OF BUSI NESS INCOME AS DECLARED BY THE ASSESSEE. 3. WITHOUT PREJUDICE TO ABOVE, THE LD. CIT(A) ERRED IN LAW AS WELL AS ON THE FACTS OF THE PRESENT CASE IN NOT ALLOWING SET OFF OF INTEREST EXPENSES OUT OF INTEREST INCOME . 14.2 WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE T HROUGH THE ORDERS OF THE AUTHORITIES BELOW IT IS NOTED THAT SIMILAR ISSU E HAS BEEN DEALT BY US IN ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEAR 2009-10 WHEREIN THE SIMILAR ISSUE HAS BEEN RESTORED TO THE FILE OF THE AO WITH FOLLOWING DIRECTIONS. WE, THEREFORE, DEEM IT IN THE INTEREST OF JUSTICE TO RESTORE THIS ISSUE TO THE FILE OF THE AO TO VERIFY WHETHER THE FDRS RECEIPTS MADE BY THE ASSESSEE WERE OUT OF COMMERCIA L EXPEDIENCY. THE AO OBSERVED THAT THE ASSESSEE WAS REQUIRED TO MAKE THE FDRS WITH THE BANKER FOR GETTING THE PERFORMANCE GUARANT EE/ BANK GUARANTEE AS TO THE CONTRACT EXECUTED BY THE ASSESS EE. THUS HE WOULD TREAT INTEREST AS INCOME FROM BUSINESS RECEIP T IF THE ASSESSEE FAILS TO ESTABLISH THE NEXUS BETWEEN THE CONTRACT A ND THE FDRS. IN THAT EVENT, NO RELIEF WOULD BE GRANTED. THUS GROUND NO. 3 OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES ITA NO. 659/JP/2013 SHRI PARMANAND VS. ACIT , CIRCLE- 1, KOTA . 17 HENCE, THE AO IS DIRECTED TO COMPLY WITH THE SAME D IRECTION AS MADE IN THE ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEAR 200 9-10 (SUPRA). THUS GROUND NO. 2 AND 3 OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 15.1 THE GROUND NO. 4 OF THE ASSESSEE IS THAT THE L D. CIT(A) HAS ERRED IN DIRECTING TO ASSESS THE SALE TAX REFUND SEPARATELY UNDER THE HEAD OF INCOME FROM BUSINESS AS REMISSION OF LIABILITY U/S 41(1). 15.2 DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE FILED THE FOLLOWING WRITTEN SUBMISSION ON THE ISSUE IN QU ESTION. BRIEF FACTS: DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SHOWN RECEIPTS OF RS.189225/- ON ACCOUNT OF SALES T AX REFUND DECLARED AS BUSINESS INCOME. THIS WAS THE REFUND GRANTED BY THE COMMERCIAL TAX DEPARTMENT IN RESPECT OF EXCESS SALES TAX DEPOSITED BY THE ASSESSEE IN EARLIER YEARS. THE ASSESSEE CLAIMED THAT THE SAME SHOULD BE DEEMED TO HAVE BEEN INCLUDED IN THE BUSINESS INCOME. BUT WHILE FRAMING THE ASSESSMENT, THE LD. AO ADDED THE SAME SEPARATELY AS INCOME FROM OTHER SOUR CES. ON FIRST APPEAL, IT WAS CLAIMED BEFORE THE LD. CIT(A) THAT SALES TAX RE FUND SO RECEIVED SHOULD BE DEEMED TO HAVE BEEN INCLUDED IN THE ESTIMATED RATE APPLIED BY THE LD. AO. HOWEVER, THE LD. CIT(A) DIRECTED THE SAME TO BE ADD ED SEPARATELY AS REMISSION OF LIABILITY U/S 41(1). NOW THE ASSESSEE HAS TAKEN THIS GROUND OF APPEAL. OUR SUBMISSION: 2.1 ESTIMATION OF BUSINESS INCOME DEEM TO COVER ALL INCOME COVERED U/S 28 TO 44 NO SEPARATE ADDITION: AT THE OUTSET, WE MAY SUBMIT THAT ONCE THE BUSINESS INCOME IS ESTIMATED BY APPLY ING OF N.P. RATE THEN THE SAME IS TAKEN AS FINAL BUSINESS INCOME FOR ALL PURP OSES WHILE COVERING OF SECTION 28 TO SECTION 44. THE REFUND HAS BEEN RECEI VED DURING THE NORMAL COURSE OF BUSINESS AND NO SEPARATE ADDITION COULD B E MADE FOR THE SAME AS REMISSION OF LIABILITY. 2.2 NO SEPARATE DEDUCTION ALLOWED ON ACCOUNT OF SAL ES TAX HENCE NO SEPARATE INCOME TO BE ADDED OUT OF RECEIPT S OF THE SAME: WE MAY ITA NO. 659/JP/2013 SHRI PARMANAND VS. ACIT , CIRCLE- 1, KOTA . 18 ALSO POINT OUT THAT THE ASSESSEE IS ALSO CLAIMING S ALES TAX EXPENSES EACH YEAR AND DURING THE YEAR ALSO SUCH EXPENSES HAVE BEEN CL AIMED. KINDLY REFER PB 16 WHERE THE SALES TAX EXPENSES HAVE BEEN CLAIMED. BUT WHILE APPLYING THE N.P. RATE, NO SEPARATE DEDUCTION IS ALLOWED ON ACCOUNT O F SUCH SALES TAX PAID BY THE ASSESSEE AND HENCE, IN COROLLARY INCOME CAN ALSO NO T BE ASSESSED SEPARATELY. CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES OF TH E CASE, THE SEPARATE ADDITION OF SALES TAX REFUND NEED TO BE DE LETED AND APPEAL OF THE ASSESSEE IS PRAYED TO BE ALLOWED ACCORDINGLY. 15.3 THE LD. DR RELIED ON THE ORDERS OF THE AUTHORI TIES BELOW. 15.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS NOTED FROM THE RECORDS THAT THE ASSESSEE RECEIVED SALES TAX REFUND OF RS. 1,89,225/- WHICH T HE AO TREATED THE SAME AS INCOME FROM OTHER SOURCES. THE LD. CIT(A) DID NO T ALLOW THE RELIEF TO THE ASSESSEE WITH FOLLOWING OBSERVATIONS. THE SALES TAX REFUND WAS NOT RELATED TO CURRENT YEAR AND THEREFORE, THE SAME CANNOT BE TREATED AS I NCLUDED IN CURRENT YEARS INCOME. HOWEVER, THE SAME AS PART OF BUSINESS IN VIEW OF SECTION 41(1) OF I.T. ACT. IT I S CLARIFIED THAT THIS INCOME WAS NOT INCLUDED IN THE INCOME COM PUTED FROM CURRENT YEARS BUSINESS (AS COMPUTED IN GROUND NO. 1 & 2). IN THE RESULT, ONLY THE HEAD OF INCOME WOULD CHANGE WITHOUT ANY RELIEF. IN THE RESULT, THIS GROUND OF A PPEAL IS TREATED AS DISMISSED. THE CONTENTION OF THE ASSESSEE IS THAT ONCE BOOKS ARE REJECTED AD PROFIT IS ESTIMATED THEN NO SEPARATE ADDITION IN RESPECT OF SALES TAX REFUND OUGHT TO HAVE BEEN MADE. IN OUR CONSIDERED VIEW, THIS ISSUE NEEDS RECONSIDERATION ITA NO. 659/JP/2013 SHRI PARMANAND VS. ACIT , CIRCLE- 1, KOTA . 19 AT THE END OF AO. HENCE, THIS ISSUE IS RESTORED TO AOS FILE FOR DECISION AFRESH. NEEDLESS TO SAY THAT HE WOULD AFFORD SUFFIC IENT OPPORTUNITY TO THE ASSESSEE. . THUS GROUND NO. 4 OF THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES. 16.0 IN THE RESULT, THE APPEALS OF THE ASSESSEE AS WELL AS REVENUE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30 -11-20 16. SD/- SD/- HKKXPUN DQY HKKJR ( BHAGCHAND) (KUL BHARAT) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL; / JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 30 /11/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI PARMANAND, KOTA 2. IZR;FKHZ@ THE RESPONDENT- THE ACIT, CIRCLE- 1 KOTA 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 659/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR