Shri Rameshbai G. Pavasiya, RAJKOT-GUJARAT V. The Income Tax Officer, Ward-5(2), RAJKOT-GUJARAT

ITA 683/RJT/2010

• Counselvise Citation: 68324914 RSA 2010
• Duration Of Justice: 3 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-03-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 09-02-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANKUR GARG
• Assessee Lawyers: SG BHUPTANI
• Keywords: Unexplained investment; Business income; Additional evidence
• Section: 80C

Judgement Text

Y : S : IN THE INCOME TAX APPELLATE TRIBULAL: RAJKOT BENCH: RAJKOT . . 0 , C . . , BEFORE SHRI T K SHARMA, JM AND SHRI D K SRIVASTAVA, AM ITA NO. 683/RJ T/2010 H3 3 / ASSESSMENT YEAR : 2006 - 07 SHRI RAMESHBHAI G. PAVASIYA V. ITO, WARD - 5(2), RAJKOT 2, AMARNAGAR, RAJKOT PAN : AEJPP 6245 P DATE OF HEARING : 20.03.2013 DATE OF PRONOUNCEMENT : 30 .0 5 .2013 ASSESSEE BY : SHRI S G BHUPTANI, CA REVENUE BY : SHRI ANKUR GARG, CIT (DR) / ORDER . . / D. K. SRIVASTAVA : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - IV, RAJKOT ON 08.12.2009, ON THE FOLL OWING GROUNDS: - THE COMMISSIONER OF INCOME - TAX (APPEALS) - IV, RAJKOT ERRED IN LAW AS WELL AS ON FACTS IN 1 . NOT ADMITTING ADDITIONAL EVIDENCE SUBMITTED IN FORM OF ANNUAL ACCOUNTS OF MILAN INDUSTRIAL CORPORATION. 2 . IN PASSING A NON - SPEAKING ORDER, WITHOUT P ASSING ANY COMMENT ON THE SUBMISSION OF THE APPELLANT AS WELL AS ADJUDICATING GROUNDS RAISED. 3 . CONFIRMING ADDITION OF GROSS TURNOVER OF RS.56,63,459/ - INSTEAD OF PROFIT ELEMENT THEREOF. 4 . CONFIRMING ADDITION OF RS.56,63,459/ - WITHOUT DISTINGUISHING THE ORDE R OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V. GURU BACCHANSINGH J JUNEJA (004 DTR 0020 (2008) AND PRESIDENT INDUSTRIES (258 ITR 654). 5 . CONFIRMING ADDITION OF RS.4,00,000/ - BEING ALLEGED UNEXPLAINED INVESTMENT MADE IN HSBC MUTUAL FUND WHICH IS IN FA CT MADE FROM THE REDEMPTION AMOUNT OF SBI MUTUAL FUND. 2 ITA 683/RJT/2010 6 . CONFIRMING ADDITION ON ACCOUNT OF ALLEGED UNEXPLAINED INVESTMENT IN RELIANCE MUTUAL FUND AND RELIANCE ELSS MUTUAL FUND OF RS.30,000/ - EACH (TOTAL RS.60,000/ - ) AND FURTHER GIVING DEDUCTION OF RS.30,00 0/ - IN CASE OF RELIANCE MUTUAL FUND U/S 80C THOUGH THEY ARE NOT MADE BY THE APPELLANT. 7 . CONFIRMING ADDITION OF RS.3,54,590/ - ON ACCOUNT OF ALLEGED UNEXPLAINED INVESTMENT IN BANK FD. 8 . CONFIRMING ADDITION OF RS.27,216/ - ON ACCOUNT OF ALLEGED UNDISCLOSED INCO ME, IGNORING THE FACT THAT THE APPELLANT HAS ALREADY OFFERED IN THE ESTIMATED PROFIT A SUM OF INTEREST OF RS.17,987/ - . 9 . CONFIRMING ALL THE ADDITIONS WITHOUT REJECTING THE BOOKS OF ACCOUNT. ALL ABOVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. 2. THE A SSESSEE IS AN INDIVIDUAL. HE IS ENGAGED IN THE BUSINESS OF TRADING OF AUTO - PARTS AND ALSO IN JOB WORK. HE FILED HIS RETURN OF INCOME ON 11.10.2006 RETURNING TOTAL INCOME AT RS.1,75,510/ - . IN THE SAID RETURN OF INCOME , HE DECLARED THE INCOME FROM JOB WORK A LONE. DURING THE COURSE OF SCRUTINY, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE WAS ALSO ENGAGED IN THE BUSINESS OF TRADING OF AUTO - PARTS. HE ALSO NOTICED THAT THE AFORESAID BUSINESS WAS NEVER DISCLOSED BY THE ASSESSEE TO THE INCOME - TAX AUTHORITIES. H E THEREFORE PROCEEDED TO MAKE FURTHER ENQUIRIES. HE ALSO NOTICED THAT THE ASSESSEE WAS MAINTAINING FOUR ACCOUNTS IN HDFC BANK AT RAJKOT WHICH TOO WERE NOT DISCLOSED BY THE ASSESSEE TO THE DEPARTMENT. A SUM OF RS.56.63 LACS WAS FOUND TO HAVE BEEN DEPOSITED IN THE SAID BANK ACCOUNTS. IN ADDITION TO THE AFORESAID DEPOSITS, HE ALSO NOTICED THAT THE ASSESSEE HAD DEPOSITED A SUM OF RS.4,60,000/ - IN THE MUTUAL FUND AS PER THE DETAILS GIVEN IN PARA 23 OF THE ASSESSMENT ORDER . HE ALSO NOTICED THAT THE ASSESSEE HAD D EPOSITED A NOTHER SUM OF RS.3,54,590/ - IN FIXED DEPOSITS AS PER THE DETAILS GIVEN IN PARA 24 OF THE ASSESSMENT ORDER. HE ALSO NOTICED THAT THE ASSESSEE HAD RECEIVED INTEREST INCOME AND CAPITAL GAIN AMOUNTING TO RS.27,216/ - AS PER THE DETAILS GIVEN IN PARA 2 5 OF THE ASSESSMENT ORDER. THE AFORESAID AMOUNTS DEPOSITED 3 ITA 683/RJT/2010 IN THE BANK OR WITH THE MUTUAL FUND WERE ALSO NEVER DISCLOSED BY THE ASSESSEE TO THE INCOME - TAX AUTHORITIES. HE THEREFORE TREATED ALL THE AFORESAID DEPOSITS AS UN - EXPLAINED INCOME OF THE ASSESSEE. ON APPEAL THE LD. CIT (A) HAS CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 3. AGGRIEVED BY THE ORDER PASSED BY THE LD CIT(A), THE ASSESSEE IS NOW IN APPEAL BEFORE THIS TRIBUNAL. IT IS FAIRLY CON CEDED BY THE LD . AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE AFORESAID DEPOSITS IN BANK WERE NEVER DISCLOSED BY THE ASSESSEE TO THE DEPARTMENT. IT IS ALSO ADMITTED THAT THE DEPOSITS MADE IN HDFC BANK REPRESENTED THE S ALE PROCEEDS OF AUTO - PARTS BUSINESS IN THE NAME OF M/S. MILAN INDUSTRIAL CORPORATION WITHO UT DISCLOSING THE SAME TO THE INCOME - TAX DEPARTMENT. HE HOWEVER PLEADED THAT TOTAL SALES OR BANK DEPOSITS CANNOT BE TAXED AS INCOME OF THE ASSESSEE. 4. IN REPLY, THE LD DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER PASSED BY THE LD CIT(A). 5. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CONSIDERED THEIR SUBMISSIONS. THE ASSESSEE IS SURELY GUILTY OF NO T DISCLOSING THE BUSINESS OF TRADING OF AUTO - PARTS TO THE INCOME - TAX DEPARTMENT. HE IS ALSO GUILTY OF NO T DISCLOSING VARIOUS BANK ACCOUNTS IN WHICH SUBST ANTIAL DEPOSITS WERE MADE TO THE INCOME - TAX DEPARTMENT. IT IS HOWEVER PLEADED BY THE LD . AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT ONLY THE PROFIT ELEMENT IN THE SALES TURNOVER OF AUTO PARTS ALONE CAN BE TAXED AND NOT THE ENTIRE SALES. HE ALSO SUBMIT S THAT THE AMOUNTS DEPOSITED IN HDFC BANK REPRESENTED S ALE PROCEEDS OF AUTO - PARTS BUSINESS AND THEREFORE THE NATURE AND SOURCE THEREOF STOOD EXPLAINED. 6. BEFORE TAKING A VIEW IN TH E MATTER , IT NEEDS TO BE CONSIDERED THAT THE ASSESSEE HAS MADE INVESTMEN TS AMOUNTING TO RS.RS.4.60,000/ - + 3,54,590/ - AS PER THE DETAILS GIVEN IN PARA 23 AND 24 OF THE ASSESSMENT ORDER. THE FACT THAT THE AFORESAID INVESTMENTS WERE NOT DISCLOSED TO THE DEPARTMENT IS QUITE EVIDENT. QUITE OBVIOUSLY THE NATURE AND SOURCE OF THE AF ORESAID INVESTMENTS WERE ALSO NOT DISCLOSED. BESIDES, THERE IS NO EVIDENCE ON RECORD THAT THE AFORESAID INVESTMENTS 4 ITA 683/RJT/2010 MADE BY THE ASSESSEE WERE MET OUT OF SALE PROCEEDS OF AUTOPARTS BUSINESS. IN THE ABSENCE OF SATISFACTORY EXPLANATION, THE AFORESAID INVESTME NTS AGGREGATING TO RS.8,14,590/ - WOULD NEED TO BE TAXED U/S 69/69A/69B. SECOND ASPECT THAT NEEDS TO BE CONSIDERED IS THAT THE ASSESSEE MUST HAVE MADE CAPITAL INVESTMENTS IN AUTO - PARTS BUSINESS WHICH WAS ADMITTEDLY NOT DISCLOSED TO THE INCOME - TAX DEPARTMENT . THE ELEMENT OF CAPITAL INVESTMENT HAS ALSO GOT TO BE TAXED AS UNEXPLAINED INVESTMENT. THIRDLY, THE ELEMENT OF PROFIT IN SALES HAS ALSO GOT TO BE TAXED. THE RATE OF NET PROFIT IN AUTO - PARTS BUSINESS IS QUITE ATTRACTIVE AND GENERALLY MORE THAN 10%. TAKING INTO ACCOUNT THE TOTALITY OF ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, WE CONSIDER IT FAIR AND REASONABLE TO RESTRICT THE OVERALL ADDITION TO RS.1 5 LA KHS IN ADDITION TO THE INCOME SHOWN BY THE ASSESSEE IN THE RETURN OF INCOME AND INTEREST AND CAPITAL GA IN SEPARATELY TAXED BY THE ASSESSING OFFICER IN TERMS OF PARA 25 OF THE ASSESSMENT ORDER. THE SAID ADDITION OF RS. 15 LAKHS WOULD TAKE CARE OF UNEXPLAINED INVESTMENT IN FIXED DEPOSITS/MUTUAL FUNDS, ETC., UNEXPLAINED INVESTMENT IN AUTO PARTS BUSINESS AND TH E ELEMENT OF PROFIT FROM SALES OF AUTO PARTS BUSINESS. WE ORDER ACCORDINGLY. THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. T 30 .0 5 . 2013 T ORDER PRONOUNCED ON 30 .05 . 201 3 SD/ - SD/ - ( . . 3 / T. K. SHARMA) ( . . / D. K. SRIVASTAVA) SH / JUDICIAL MEMBER / ACCOUNTANT MEMBER RAJKOT: 30 .0 5 .2013 BT T / COPY OF ORDER FORWARDED TO: - 1 . / APPELLANT SHRI RAMESHBHAI G. PAVA SIYA, 2, AMARNAGAR, RAJKOT 2 . R / RESPONDENT - ITO, WARD - 5 (2), RAJKOT 3 . Y V / CONCERNED CIT - III, RAJKOT 4 . V - / CIT (A) - IV, RAJKOT 5 . HHY , Y , / DR, ITAT, RAJKOT 6 . 3 / GUARD FILE. / BY ORDER , TRUE COPY PRIVATE SECRETARY, ITAT, RAJKOT