The ITO, Ward-3 (1) (2), RAJKOT-GUJARAT V. Shri Jitendra P. Rajdev, RAJKOT-GUJARAT

ITA 683/RJT/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0195 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 02-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D R CHHATRE
• Keywords: Unexplained investment; Tax effect

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT [CONDUCTED THROUGH E COURT AT AHMEDABAD] BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA.NO.683/RJT/2014 WITH CO NO.03/RJT/2015 / ASSTT. YEAR: 2006-2007 ITO, WARD - 3(1)(2) RAJKOT. VS SHRI JITENDRA P. RAJDEV SHRUTI ENTERPRISE NAVRANGPARA-3 MAVDI PLOT, RAJKOT. ! / (APPELLANT) '# ! / (RESPONDENT) REVENUE BY : SHRI D.R. CHHATRE, SR.DR ASSESSEE BY : NONE / DATE OF HEARING : 22/08/2016 / DATE OF PRONOUNCEMENT: 23/08/2016 $%/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINS T THE ORDER OF THE LD.CIT(A)-IV, RAJKOT, DATED 16.9.2014 PASSED FOR TH E ASSTT.YEAR 2006-2007. ON RECEIPT OF NOTICE IN THE REVENUES APPEAL, THE A SSESSEE HAS FILED CO BEARING NO.3/RJT/2015. 2. THE LD.COUNSEL FOR THE ASSESSEE HAS FILED AN ADJ OURNMENT APPLICATION. HOWEVER, WITH THE ASSISTANCE OF THE LD.DR, WE HAVE GONE THROUGH THE RECORD CAREFULLY, AND WE DO NOT DEEM IT NECESSARY TO GRANT ANY ADJOURNMENT TO THE ASSESSEE. THEREFORE, THE APPLICATION OF THE ASSESS EE IS REJECTED. ITA NO.683/RJT/2014 WITH CO 2 3. SOLITARY ISSUE AGITATED IN THE APPEAL AS WELL AS IN THE CO IS INTER- CONNECTED WITH EACH OTHER. BEFORE CARVING OUT THE SPECIFIC GRIEVANCE, WE DEEM IT NECESSARY TO MAKE REFERENCE TO THE BRIEF BA CKGROUND OF THE DISPUTE. 4. ASSESSEE IS AN INDIVIDUAL. HE HAS FILED HIS RET URN OF INCOME ON 28.12.2006 DECLARING TOTAL INCOME AT RS.70,860/-. THE LD.AO GOT INFORMATION FROM AIR WING EXHIBITING THE FACT THAT THE ASSESSEE HAS DEPOSITED A SUM OF RS.15,87,200/- IN CASH WITH IDBI, RAJKOT. ACCORDIN G TO THE AO, THE ASSESSEE FAILED TO EXPLAIN THE SOURCE OF DEPOSITS, THEREFORE , HE MADE ADDITION OF RS.15,87,200/- AND TAXABLE INCOME OF THE ASSESSEE H AS BEEN DETERMINED AT RS.16,58,060/-. 5. ON APPEAL, THE LD.CIT(A) OBSERVED THAT THIS BANK ACCOUNT WAS BEING USED BY THE ASSESSEE FOR THE PURPOSE OF BUSINESS. THERE IS A CHAIN OF DEPOSITS AND WITHDRAWALS IN THE ACCOUNT, THEREFORE, IN THE O PINION OF THE CIT(A), THE PROFIT ELEMENT ON THE TOTAL DEPOSITS AT THE RATE OF 10% OUGHT TO BE TREATED AS INCOME OF THE ASSESSEE. THE LD.CIT(A) HAS FURTHER OBSERVED THAT THE ASSESSEE MUST HAVE USED AN INITIAL CAPITAL OF RS.50,000/- FO R ROUTING A TOTAL TURNOVER OF RS.15,87,2000/-. IN THIS WAY, THE LD.CIT(A) ESTIMA TED THE PROFIT ON THIS TURNOVER OF RS.15,87,200/- AT THE RATE OF 10% AND U PHELD THE ADDITION OF RS.1,58,720/-. IN ADDITION TO THIS, THE LD.CIT(A) HAS ESTIMATED THE INITIAL UNEXPLAINED INVESTMENT BY THE ASSESSEE AT RS.50,000 /-. ACCORDINGLY, THE LD.CIT(A) HAS CONFIRMED THE ADDITION OF RS.2,08,720 /- AND DELETED THE REST. THE REVENUE IS AGGRIEVED AT THE DELETION OF RS.13,7 8,480/-, WHEREAS, THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF ADDITIO N AT RS.2,08,720/- IN HIS CO. ITA NO.683/RJT/2014 WITH CO 3 6. AS FAR AS APPEAL OF THE REVENUE IS CONCERNED, WE FIND THAT THE REVENUE HAS FILED THIS APPEAL ON 02.12.2014. ON 10.12.2015 THE CBDT HAS ISSUED INSTRUCTIONS BEARING NO. 21/2015 PROHIBITING ITS SU BORDINATE AUTHORITIES FROM FILING OF THE APPEAL TO THE TRIBUNAL AGAINST THE OR DER OF THE CIT(A) WHERE THE TAX EFFECT BY VIRTUE OF THE RELIEF GIVEN BY THE CIT (A) IS LESS THAN RS.10 LAKHS. THE INSTRUCTIONS HAVE BEEN MADE APPLICABLE WITH RET ROSPECTIVE EFFECT, MEANING THEREBY, THESE INSTRUCTIONS ARE APPLICABLE ON PENDING APPEALS ALSO. IN THE PRESENT CASE, TAX EFFECT IN THE IMPUGNED ADD ITION CONTESTED BY THE REVENUE IS ADMITTEDLY BELOW RS.10 LAKHS. THEREFORE, THE PRESENT APPEAL DOES NOT SURVIVE AND DESERVES TO BE DISMISSED BEING TREA TED TO BE FILED IN VIOLATION OF THE ABOVE CBDT INSTRUCTIONS. IT IS FURTHER OBSE RVED THAT SINCE, WHILE HEARING THE APPEAL, SUCH FACTORS COULD NOT BE CROSS -VERIFIED, THEREFORE, IN CASE, ON RE-VERIFICATION AT THE END OF THE AO, IT CAME TO THE NOTICE THAT THE TAX EFFECT IS MORE OR IT FALLS WITHIN THE AMBIT OF EXCEPTIONS PROVIDED IN THE INSTRUCTION, THEN THE DEPARTMENT WILL BE AT LIBERTY TO APPROACH THE TRIBUNAL FOR RECALL OF THIS ORDER. SUCH APPLICATION SHOULD BE FILED WITHI N LIMITATION PRESCRIBED UNDER THE LAW. IN VIEW OF THE ABOVE, THE APPEAL OF THE R EVENUE IS DISMISSED. 7. SO FAR AS CO IS CONCERNED, WE FIND THAT THE ASSE SSEE FAILED TO GIVE ANY PLAUSIBLE EXPLANATION ABOUT THE NATURE OF SOURCE OF DEPOSITS IN THE BANK ACCOUNT. THE STAND OF THE ASSESSEE WAS THAT THESE ARE RECEIPTS FROM BUSINESS. THE AMOUNTS HAVE BEEN WITHDRAWN AND RE-DEPOSITED IN THIS ACCOUNT. THE LD.CIT(A) HAS ACCEPTED THIS FACT. THE ASSESSEE HAS NOT DISCLOSED ANY PROFIT FROM THIS ACTIVITY. ESTIMATION OF PROFIT ON SUCH U NEXPLAINED TURNOVER AT THE RATE OF 10% IS NOT ON THE HIGHER SIDE. SIMILARLY, ESTIMATION OF INITIAL INVESTMENT AT RS.50,000/- FOR ACHIEVING THIS TURNOV ER IS ALSO NOT ON HIGHER SIDE. THIS WAS THE REASON, WHICH PERSUADED US NOT TO GRANT ANY ADJOURNMENT ITA NO.683/RJT/2014 WITH CO 4 TO THE ASSESSEE. AFTER CONSIDERING ALL THESE FACTS , WE DO NOT FIND ANY MERIT IN THE CO FILED BY THE ASSESSEE. ACCORDINGLY, THE SAM E IS DISMISSED. 8. IN THE RESULT, APPEAL OF THE REVENUE AND THE CRO SS-OBJECTION OF THE ASSESSEE, BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 23 RD AUGUST, 2016 AT AHMEDABAD. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER